The core of the profit of copper foil enterprises is not the copper price in the processing fee! Under the tide, enterprises expand their production one after another [SMM annual special topic]

In 2021, a large plate that can not be ignored in the copper industry must be copper foil!

With the popularity of the lithium power industry, the competition pattern of copper foil in the middle reaches of lithium batteries is comparable to the diaphragm. At present, there are only a handful of companies with less than 6 μ m technology and production capacity. At present, Jiayuan Technology, Nord shares and other enterprises have announced production expansion, Jiangxi Copper, Silver Nonferrous and other copper enterprises announced to be involved in the field of copper foil, but also shows the current hot market in the field of copper foil.

According to SMM statistics, the annual output of lithium battery copper foil in 2020 is more than 2000 tons, and there are 10 enterprises with a growth rate of more than two digits. The total output of lithium copper foil in Longdian Huaxin, Nuode and Guangdong Jiayuan is about 77000 tons, accounting for about 50% of the total domestic output.

Copper foil pricing model: the finished product price of copper foil is mainly composed of copper price + processing fee, the price of copper wire purchased by copper foil enterprises is generally in accordance with the model of average price of electrolytic copper in SMM (SMM) No.1 + processing fee, while the price of selling copper foil is mainly in accordance with the monthly average price + processing fee model of spot last month.

The decisive factor of the enterprise's operating margin is the processing fee difference between the enterprise and the supplier, that is, "sales processing fee-supplier processing fee". In essence, the change of copper price has little influence on the enterprise's operating margin, so it has little influence on the net profit of copper foil enterprises. Based on this background, the profitability of the processing fee level of the company's overall products is the core key variable.

First of all, lithium copper foil, as the carrier and conductor of the anode material of lithium battery, was promoted by the first round of rapid development of new energy vehicles around the world from 2016 to 2017, and the processing fee began to rise. By 2017, the average processing fee of 8um lithium copper foil reached 50,000 yuan / ton, but with the slowdown of the downstream growth rate of lithium battery and the expansion of lithium copper foil production capacity in 2019, the processing fee of 8 μ m lithium copper foil fell again to the level of 30,000 yuan / ton. Since the second half of 2020, the growth of downstream demand has led to the shortage of lithium copper foil, and the processing cost of copper foil has rebounded significantly. Up to now, the processing fee of 8 μ m copper foil is about 36000 yuan / ton, that of 6 μ m copper foil is 46000 yuan / ton, and that of 4.5 μ m copper foil is about 75000 yuan / ton. Standard copper foil also began to rise sharply in the third quarter of 2020, with mainstream models rising by 40%. At present, 18 μ m is 43000 yuan / ton, 35 μ m is 40, 000 yuan / ton, and 70 μ m is 42000 yuan / ton.

Enterprises have joined the copper foil craze.

On the evening of December 8, Lithium Electric Copper foil leader Jiayuan Science and Technology announced that the company signed a memorandum of investment intention for a joint venture with Ningde Times, intending to jointly set up a joint venture company with an initial registered capital of 500 million yuan, Jiayuan Science and Technology subscribed to 400 million yuan, accounting for 80% of the shareholds. the registered capital of the joint venture company can be increased to 2 billion yuan by stages. The joint venture company will plan to build a high-performance copper foil project with an annual output of 100000 tons, which will be built in two phases. At the same time, all the products produced by the joint venture company should be given priority to supply to the Ningde era.

In fact, Jiayuan Technology, as a lithium copper foil giant, previously said in investor research that the first production line of the company's annual production line of 15000 tons of high-performance copper foil project, located in Baidu Town, Meixian District, Guangdong Province, plans to gradually start production by the end of December. Jiayuan Science and Technology Park has an additional annual output of 16000 tons of high-performance copper foil project, and Jiayuan Science and Technology (Ningde) Co., Ltd. plans to gradually put into production in the second half of next year. At the same time, it steadily promotes the construction of Jiangxi Jiayuan Science and Technology Co., Ltd. with an annual output of 20, 000 tons of electrolytic copper foil, and Shandong Jiayuan New Energy Materials Co., Ltd. with an annual output of 30, 000 tons of high-precision ultra-thin electronic copper foil (Phase II project). Strive for the expansion project to be completed and put into production at an early date.

Prior to this, Nuode, another lithium copper foil giant, also disclosed a fixed increase plan on the evening of June 7, intending to raise no more than 2.288 billion yuan for the electrolytic copper foil project for high-performance and extremely thin lithium-ion batteries in Qinghai, the electrolytic copper foil project for Huizhou power battery, the replenishment of working capital and the repayment of bank loans.

Hailiang also said earlier that the company's annual output of 150000 tons of high-performance copper foil material project held a launching ceremony in Lanzhou New area. The total investment of the project is 8.9 billion yuan, mainly to build a production base of 100000 tons of high-performance lithium electric copper foil materials and 50, 000 tons of high-performance electronic circuit copper foil materials. Specifically, the annual output of 150000 tons of high-performance copper foil material project is planned to be divided into three phases, each phase of 50, 000 tons. The production capacity of 25000 tons in the first phase of the project is scheduled to be put into production in the fourth quarter of 2022 and the rest in the second quarter of 2023. The second phase of the project is scheduled to start construction in the third quarter of 2023, of which 25000 tons will be put into production in the second quarter of 2024. The rest will be put into production in the fourth quarter of 2024. Construction of the third phase of the project is scheduled to start in the third quarter of 2024, with a production capacity of 25000 tons in the second quarter of 2025 and the rest in the fourth quarter of 2025.

On November 26th, Shandong Hesheng Copper Co., Ltd. put into production the second phase 5000 tons project and the third phase 20, 000 tons of high-performance lithium copper foil signing ceremony was held in Dongying, Shandong Province. Hesheng Copper is a wholly owned subsidiary of Shenzhen Longdian Huaxin Group, with a total investment of 3.5 billion yuan, mainly producing copper foil for high-performance lithium batteries. It is one of the core production bases of Longdian Huaxin Group in East China.

Baiyin Nonferrous announced on the evening of December 7 that the company launched a cooperative project with an annual output of 200000 tons of high-grade lithium copper foil and carried out preliminary work. According to disclosure, the total investment of the project is about 12.15 billion yuan, and it is initially determined that the main product is electrolytic copper foil for 4.5 micron and 6 micron lithium battery. According to the plan, the main body of the project is Gansu Defu New Materials Co., Ltd., at present, its electrolytic copper foil production capacity is basically 30,000 tons / year, and the third phase of the 40,000 tons / year project is under construction, and the production capacity will reach 70,000 tons / year by the end of 2022. The construction of the follow-up project is carried out as planned. Baiyin Nonferrous said that the company has an annual production capacity of 200000 tons of cathode copper, the company can give full play to its copper raw material advantages to ensure the stability of the project supply chain.

Jiangxi Copper, a copper giant, announced in July 2021 that it would enter the field of lithium copper foil and plan to invest 12.8 billion yuan to build three projects with an annual production capacity of 100000 tons of lithium copper foil, 220000 tons of copper rods and 30, 000 tons of casting materials. According to its disclosure, the company's copper foil production line is divided into two parts, one is conventional copper foil with a production capacity of 15000 tons / year, and the other is copper foil for lithium batteries, which also has a production capacity of 15000 tons / year.

Capacity outlook for 2022

According to SMM, in 2022, the total annual production capacity of newly built copper foil factories (or production lines) in China will reach about 100000 tons. Among them, 85% is the new production capacity of copper foil for lithium battery. SMM predicts that the production capacity of electrolytic copper foil in China will continue to increase at a double-digit annual growth rate from 2021 to 2023, in which, in 2022, the capacity ratio of copper foil for electronic circuits and copper foil for lithium batteries was reversed in the first year, that is, the capacity of copper foil for lithium batteries was higher than that for electronic circuits.

Institutional point of view

Ping an Securities expects the market size of lithium copper foil in China to maintain a compound growth rate of 35 per cent from 2020 to 2025 and reach a market size of about 470000 tons by 2025. Among them, the share of power batteries increased from 55% in 2020 to 66% in 2025, while the share of energy storage increased from 12% in 2020 to 25% in 2025. In addition, according to the analysis of Huachuang Securities, the global supply and demand of lithium copper foil has entered a tight balance since 2021, of which products of 6 μ m and below are more scarce.

Citic Securities pointed out that the worry about the future oversupply of lithium copper foil is the main contradiction of the current copper foil plate. The jump in capacity of lithium copper foil is expected to occur in 2023, which will lead to a shift in the competitive factors of the industry from the equipment and capital bottlenecks of the past: 1) customer channels, 2) supply chain management, and 3) continuous iterative ability of products. At the same time, high-performance electronic circuit copper foil has become the next tuyere in the market, and companies in related fields are expected to widen the profit gap with enterprises in the same industry. To sum up, it is recommended that Jiayuan Technology, which has the ability of technical iteration and high-quality customer channels and takes the lead in high-end electronic circuit copper foil in the lithium copper foil industry, and Hailiang Co., Ltd., which has outstanding advantages in supply chain management and cost control.

Bank of China Securities analysis said that the existence of industry barriers makes copper foil nominal production capacity and downstream actual demand difficult to match, showing a structural shortage. At present, the production of 1GWh lithium battery requires about 700t 6 μ m copper foil or 900t 8 μ m copper foil, the lithium copper foil industry as a whole is in a state of full production and short supply, and the major copper foil enterprises have started to expand production, but due to the long period of equipment in place and construction, most of the new capacity is released at the end of 2021 and 2022, and the short-term supply gap is difficult to make up. It is expected that the high temperature of the lithium copper foil plate is still expected to continue in 2022.

Huachuang Securities estimates that the total global output of lithium copper foil from 2021 to 2023 is 368000 tons, 497000 tons and 659000 tons respectively, and the total demand is 346000 tons, 492000 tons and 673000 tons respectively. Huachuang Securities expects that the global supply and demand of lithium copper foil will enter a tight balance from 2021, of which products of 6 μ m and below are more scarce.

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