In H1 2026, the China lithium battery separator market exhibited a pattern of stabilizing first, tightening later, with prices rising quarter by quarter. Q1 was a post-holiday adjustment period for the industry. Affected by the Chinese New Year break, enterprise maintenance, and a slow downstream procurement pace, production pulled back notably in February, with the market showing temporarily weak supply and demand. Entering March, EV and ESS production schedules gradually recovered, and separator operating rates rebounded accordingly. However, as battery cell manufacturers had stockpiled relatively fully before the holiday, their procurement pace remained steady, and price adjustments across specifications were broadly limited.
From late March, the supply-demand relationship began to tighten. EV and ESS demand continued to grow, with top-tier separator players fully booked and capacity utilization rates approaching high levels. Leading battery cell enterprises not only locked in mainstream separator capacity but also extended some long-term contracts to second- and third-tier separator enterprises, driving the overall industry operating rate above 80%. Against a backdrop of supported demand and limited supply growth, separator enterprises’ willingness to raise prices increased. However, influenced by differences in product positioning and bargaining power, progress on price adjustments varied significantly among different players.
May was the period of most concentrated price hikes in H1. Top-tier players, backed by full orders on hand and a stable client structure, transmitted prices relatively smoothly; second- and third-tier players, constrained by low and mid-end product competition and limited bargaining power, saw more moderate gains in transaction prices. Meanwhile, battery cell enterprises faced cost pressures from rising lithium carbonate and other key materials, reducing their acceptance of separator price hikes, and intensifying the tug-of-war between upstream and downstream. In June, earlier price adjustments were gradually implemented, and the market entered a phase of executing new prices. Downstream demand stayed high, and separator production schedules continued to grow, keeping overall supply and demand relatively tight, but the momentum for further increases weakened, with the market mainly operating steadily.
On the production side, China’s cumulative lithium battery separator production from January to June reached approximately 17.416 billion m², of which wet-process separator accounted for 15.005 billion m² (86.16%) and dry-process separator 2.411 billion m² (13.84%). Q2 separator production was about 9.475 billion m², up 19.31% QoQ, reflecting notably stronger downstream demand in Q2. On the price side, the daily average transaction price for 7μm+2μm wet-process coated separator rose from 1.145 yuan/m² at the beginning of January to 1.235 yuan/m² at the end of June, a cumulative increase of 0.09 yuan/m², or about 7.86%.
Supply Side: Production Continued to Recover, Effective New Supply Remained Relatively Limited
In H1 2026, China’s lithium battery separator production generally trended downward first, then upward.
In January, China’s monthly separator production reached approximately 2.723 billion m². In February, affected by the Chinese New Year holiday, reduced effective production days, and maintenance at some enterprises, industry production fell to 2.401 billion m², down 11.82% MoM, marking the lowest monthly level of H1.
Entering March, as downstream battery enterprises resumed production schedules, separator enterprises' operating rates gradually improved, and March production increased to 2.818 billion m², up 17.34% MoM. From April to June, China's separator production reached 3 billion m², 3.163 billion m², and 3.313 billion m², up 6.46% MoM, 5.43% MoM, and 4.74% MoM, respectively, continuously setting new monthly production highs for the year.
Quarterly, China's Q1 separator production was approximately 7.941 billion m², rising to 9.475 billion m² in Q2, up 19.31% QoQ. The notable Q2 production increase, on one hand, reflected sustained demand release from the EV and ESS sectors, and on the other hand, indicated a significant improvement in operating levels at separator enterprises.
By process structure, wet-process separator remained the main source of industry output growth. In H1, cumulative wet-process separator production was approximately 15.005 billion m², accounting for 86.16% of total separator production. Monthly wet-process separator production rose from 2.296 billion m² in January to 2.9 billion m² in June, an increase of 26.30%; over the same period, the share of wet-process products rose from 84.32% to 87.53%.
Q2 wet-process separator production increased by approximately 1.468 billion m² over Q1, accounting for over 95% of the quarterly increase in total separator production. As power batteries continue to develop toward higher energy density and thinner profiles, demand for ultra-thin wet-process base films such as 5μm and high-performance coated products has increased, with related production lines maintaining high utilization.
For dry-process separator, H1 cumulative production was approximately 2.411 billion m², accounting for 13.84% of total separator production. In February, dry-process separator production declined to 338 million m², then gradually recovered; however, from April to June, monthly production remained largely within the range of 412–413 million m², with relatively limited growth. The energy storage market continued to provide stable demand support for dry-process separator, but due to faster growth in wet-process separator production, the share of dry-process products further declined.
Despite continuous growth in separator production in H1, incremental effective supply in the industry remained relatively limited. At the current stage, production increases mainly came from accelerated existing production lines, equipment upgrades, and capacity ramp-ups, as new capacity had yet to be released in a concentrated manner. From equipment installation and production line debugging to yield rate improvement and client certification, new separator production lines still require a long cycle; therefore, planned capacity cannot be quickly converted into effective supply.
As a result, the overall supply flexibility of the industry remained limited, with supply of ultra-thin 5μm base film and some high-performance coated products in particular staying tight.
Demand Side: Jointly Driven by EV and ESS, Q2 Orders Increased Significantly
In H1 2026, separator demand displayed clear signs of seasonal recovery.
At the beginning of the year, downstream battery cell enterprises completed their phased stockpiling before the Chinese New Year, which caused their procurement pace to slow down before and during the holiday. With some separator enterprises also entering their spring maintenance period, market supply and demand weakened simultaneously, and prices remained stable overall.
Starting in March, power battery production schedules gradually recovered, while demand in the ESS sector remained buoyant, leading to a continuous increase in separator procurement demand. Order backlogs for top-tier separator players stayed high, and some enterprises experienced persistent capacity tightness.
In the power battery sector, LFP batteries, with their cost, safety, and cycle life advantages, continued to serve as a key pillar of separator demand. As demand from the mainstream NEV market grew, battery enterprises gradually raised their production schedules, leading to a simultaneous increase in wet-process separator procurement. Meanwhile, the development of power batteries toward higher energy density and fast charging drove demand for ultra-thin base films, such as 5μm separators, and high-performance coated separators.
In the ESS sector, orders for energy storage projects in and outside China remained at a high level in H1, and ESS battery enterprises continued to increase their production schedules, creating significant growth in separator demand. As ESS battery cells move toward larger capacities and longer cycle life, battery enterprises placed even greater emphasis on the safety, consistency, and supply stability of separators.
In April, the overall industry operating rate rose to approximately 82%, with top-tier separator players running at near-full capacity and second- and third-tier enterprises also seeing relatively full orders. To secure a stable supply of raw materials, some top-tier battery cell enterprises expanded their separator supply sources, gradually extending their reach from locked-in capacity at top players to second- and third-tier enterprises with stable supply capabilities, driving an increase in the industry's overall capacity utilization rate.
Looking at production volume changes, China's monthly separator production grew from 2.401 billion m² in February to 3.313 billion m² in June, a cumulative increase of 37.96%. As production recovered rapidly, separator prices continued to rise, reflecting that the new output was largely absorbed by downstream demand, with the market's supply-demand relationship gradually shifting from balanced to tight.
Price Side: Overall Stability in Q1, Followed by a Concentrated Increase Phase in Q2
In H1 2026, the price of 7μm+2μm wet-process coated base film exhibited an overall stepwise upward trend.
In Q1, separator prices were mainly stable. At the beginning of January, the daily average price of 7μm+2μm wet-process coated base film stood at 1.145 yuan/m², subsequently edging up to 1.16 yuan/m² and holding steady around the Chinese New Year holiday. During the Chinese New Year, downstream procurement pace slowed somewhat, and some separator companies conducted maintenance simultaneously. The overall market showed a weak supply-demand pattern, with limited room for price adjustment across various specifications. In late March, as EV and ESS battery production schedules picked up, coupled with surging raw material PP and PE prices, some top-tier separator players began to mull price hikes. On March 27, the daily average price of 7μm+2μm wet-process coated separator rose to 1.17 yuan/m². In April, the supply-demand relationship tightened further, the industry operating rate stayed high, and top-tier separator players were near full capacity. However, downstream battery cell enterprises remained cautious about price adjustments, and market prices were largely stable, with the daily average price of 7μm+2μm wet-process coated separator essentially holding at 1.17 yuan/m². Entering May, separator prices entered a concentrated rising phase in H1. The daily average price of 7μm+2μm wet-process coated separator gradually rose from 1.17 yuan/m² at the beginning of the month to 1.231 yuan/m² at month-end May, a cumulative increase of 0.061 yuan/m², up about 5.21%.
This round of price increases was mainly driven by improvements in the supply-demand relationship. On the one hand, EV and ESS battery production schedules remained relatively high, and separator companies continued to see increasing orders. On the other hand, the release of new effective capacity was relatively slow, and top-tier players maintained high capacity utilization rates, leading to tightening supply for some products. Rising raw material prices also had some impact on separator companies' costs. During some periods in H1, polypropylene and polyethylene prices rose to relatively high levels, but the share of PP and PE in separator production costs was limited; the market price adjustments reflected more the changes in the industry's supply-demand relationship rather than purely cost-push factors. Meanwhile, price negotiations between upstream and downstream remained notable. Top-tier separator players, by leveraging stable client resources, high product certification barriers, and tight effective capacity, exhibited relatively strong price pass-through ability. In contrast, second- and third-tier enterprises, affected by competition in the low- and mid-end markets and client bargaining, saw more limited actual price increases.
Entering June, previously announced price hikes gradually took effect, and the market focused on executing newly signed orders and stabilizing supply. For most of June, the daily average price of 7μm+2μm wet-process coated separator held at 1.231 yuan/m², edging up to 1.235 yuan/m² at month-end, showing a stable high-level trend overall.
Overall in H1, the daily average price of 7μm+2μm wet-process coated separator rose from 1.145 yuan/m² in early January to 1.235 yuan/m² at end-June, a cumulative increase of 7.86%. Of this, May contributed approximately 68% of the H1 cumulative gain, marking the most concentrated phase of price increases.
H2 Outlook
Into H2 2026, power battery and energy storage demand is expected to maintain high prosperity, providing sustained support for separator demand. With terminal production schedules holding at high levels, procurement demand from leading battery cell enterprises is expected to remain relatively stable, and some orders will extend to second- and third-tier separator enterprises with stable supply capabilities, supporting a high industry-wide operating rate.
Supply side, new capacity addition will still be dominated by existing line retrofits, equipment speed-ups, and capacity ramp-up, with greenfield capacity unlikely to see concentrated release in the near term. Constrained by equipment debugging, yield improvement, and client certification cycles, the conversion of planned capacity into effective supply still requires time, keeping the overall supply growth manageable in H2. Among products, the supply elasticity of 5μm ultra-thin base film and some high-performance coated products remains relatively limited, and structural tightness in supply-demand is likely to persist.
Price-wise, earlier price hikes have been gradually implemented, and the near-term market focus will be on executing new prices and ensuring stable supply. Supported by demand and limited new effective supply, separator prices overall are expected to consolidate on a strong note in H2, but further upside room will be capped by cost pressure and price acceptance among downstream battery cell enterprises. By product, the conventional base film market remains sufficiently competitive, leaving relatively limited room for further price increases; high-end thin base film and coated products, supported by supply-demand tightness, are expected to see stronger price resilience.
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