The demand for copper foil continues to soar due to the popularity of lithium batteries. Industry insiders: copper foil enterprises' orders are in short supply and prices will remain high.

Recently, the market demand for new energy vehicles continues to be strong, driving the lithium battery material market to continue to be hot. In order to prevent the impact of the epidemic, it is impossible to import battery materials from foreign enterprises, leading battery companies including Ningde era, BYD and other active stock.

As the raw material of lithium battery copper foil demand is strong, affected by this, copper foil prices continue to rise, domestic copper foil production enterprise Chaohua Technology (002288.SZ) related sources told reporters that lithium battery copper foil market supply gap is large, copper foil prices are expected to maintain an upward trend this year.

In order to ensure the supply of copper foil, many lithium battery manufacturers are trying to carry out various cooperation with copper foil enterprises, after LG Chemical invested 40 billion won (about 230 million yuan) in Jiujiang Defu Technology, which attracted the attention of the industry.

In this regard, Tongling Nonferrous (000630.SZ) related people told reporters that the current copper foil supply exceeds demand, copper foil enterprises will certainly strive for the maximum profit space, will not easily fix product production capacity for suppliers.

Enterprise orders are in short supply.

According to the cumulative data of the industry, from January to April 2021, domestic production and sales of new energy vehicles were 750000 and 732000 respectively, up 307.11% and 257.07% respectively from the same period last year. Such a huge increment of new energy vehicles has brought supply pressure to the battery industry and its raw material copper foil.

In this context, the cost of copper foil processing is rising. Tongling non-ferrous sources told reporters that recently, copper foil processing costs have continued to rise, more than 100% higher than last year's low point, the standard copper foil processing fee is now more than 30,000 yuan / ton, and the lithium battery grade copper foil processing fee is close to 50,000 yuan / ton.

It is worth noting that recently, the copper foil market has once again ushered in a price boom. The average price of copper foil has risen by about 22% compared with the beginning of the year, and the price of electronic copper foil has risen by 60% since the low point of 2020.

Affected by this, the profits of copper foil production enterprises have also risen. Last year, the net profit of Tongling non-ferrous copper foil plate was 72 million yuan, while in the first quarter of 2021, due to the sharp rise in copper foil processing fees, the net profit of copper foil plate reached 52 million yuan in the first quarter.

Even if the copper foil processing fees continue to rise, the products are still in short supply. Chaohua technology-related sources told reporters that the current copper foil downstream demand is strong, orders have been scheduled for the second half of the year. Most of the listed companies of PCB and copper clad laminate in China and the top 100 companies in the industry, such as Oshkang, Shenghong, Jingwang, Zhongjing, and so on, are placing orders with Chaohua Technology, and the company's new customers and orders continue.

Tongling non-ferrous copper foil orders have been fully booked in the first half of this year, and have begun to arrange order production plans for the second half of the year.

Chaohua technology-related sources also told reporters that downstream new energy vehicles, 5G, IDC, energy storage and other areas of explosive growth since the beginning of this year, led to rapid growth in copper foil demand, while copper foil supply can not be effectively solved in the short term, the situation is expected to remain in short supply for a long time.

Wu Hao, an industry analyst, told reporters that the supply of products falls short of demand, and the high price of copper foil will continue to be maintained.

It is difficult for the industry to expand production in the short term.

In the face of copper foil in short supply, many companies are also expanding production to prepare for war, hoping to occupy the first opportunity in the future market competition.

Among them, 688388.SH plans to build 15000 tons / year and 20, 000 tons / year lithium copper foil projects in Ningde and Ganzhou respectively in October and November 2020, and build 16000 tons / year production capacity in Meizhou in March 2021. In addition, the production capacity of Jiayuan Technology under construction or in the planning stage also includes 5000 tons / year new energy power battery high-performance copper foil technology transformation project, annual production capacity of 15000 tons of high-performance copper foil project and so on.

In addition, 600110.SH has started construction of the 15000-ton project in Qinghai Node II in 2020, and plans to build 68000 tons of high-end ultra-thin lithium copper foil capacity in Huizhou, Fujian and Nanjing.

According to the reporter's understanding, Chaohua Technology has an annual output of 8000 tons of high-precision electronic copper foil project, which has been successfully put into production at the end of November 2020. After the project is put into production, the design capacity of Chaohua science and technology copper foil reaches 20, 000 tons / year, and the actual production can reach 25000 tons / year.

At present, the production capacity under construction of Chaohua Technology includes the first phase of Guangxi Yulin with an annual production capacity of 100000 tons of high-precision copper foil and an annual output of 10 million pieces of high-frequency copper clad laminate, which started in February 2021. And the Meizhou high-precision ultra-thin lithium copper foil project and 6 million high-end core board projects that began construction in November last year. "after these projects are completed and put into production, the future copper foil production capacity of Chaohua Technology will reach 160000 tons / year. It is expected to become the largest supplier of copper foil in the world. " Chaohua technology-related people told reporters.

At the same time, Tongling Nonferrous's latest ultra-thin electronic copper foil project with an annual output of 20,000 tons for high-precision energy storage (Phase II) has just started construction on May 20, and the project is expected to enter the commissioning phase by the end of 2022. After the project is completed and put into production, Tongling Nonferrous will have an annual production capacity of 55000 tons of all kinds of high-precision electronic copper foil.

In this regard, Tongling non-ferrous related sources told reporters that the copper foil industry capacity expansion is slow, the annual production capacity of 10,000 tons of copper foil, the construction cycle is as long as 16 months, products can enter the downstream battery enterprise supply chain, but also need more than 15 months, that is to say, the copper foil capacity of 10,000 tons from construction to production, before and after 3 years, significantly slower than the downstream battery expansion speed. At present, the copper foil industry wants to rely on production expansion to change the market pattern, which is difficult to quench the thirst in distant water.

It is difficult to bind copper foil production capacity downstream.

Copper foil supply exceeds demand, downstream battery enterprises in order to ensure production, have tried to seek cooperation with copper foil enterprises to ensure the supply of raw materials.

In addition to South Korea's LG Chemical shares in Jiujiang Defu, domestic head battery manufacturers Ningde Times (300750.SZ), BYD (002594.SZ), ATL, AVIC Lithium, Lishen Battery, Yiwei Lithium Energy have cooperated with local copper foil leader Jiayuan Technology, Nord shares, Chaohua Technology and other copper foil production enterprises.

In this regard, Chaohua technology-related sources told reporters that since 2021, the company has established order cooperation with many well-known customers downstream to ensure a stable supply of copper foil for downstream customers.

However, in the view of Tongling non-ferrous related people, it is difficult for downstream battery manufacturers to bind to the current production capacity of copper foil, because the price of copper foil is going up all the way, and if copper foil enterprises want to pursue profit maximization, they should combine their own product characteristics according to the actual demand downstream. Find the most suitable seller. To put it simply, the most ideal sales state of copper foil enterprises is to split the largest area of copper foil produced by themselves and sell it to two battery manufacturers without product loss. Although Tongling Nonferrous has also discussed relevant cooperation with downstream batteries, no agreement has been reached so far.

Wu Hao also told reporters that downstream battery manufacturers need to cooperate with copper foil enterprises, the main mode is a joint venture between the two sides to build new enterprises, while joint research and development of copper foil products suitable for the needs of battery enterprises, and the existing copper foil production capacity can not be fixed.

Copper foil is in short supply, and battery manufacturers are bound to copper foil enterprises, which also brings benefits to the share prices of copper foil listed companies. Zhongtai Securities Research report believes that the volume and price of the copper foil market will rise, and the performance of relevant enterprises, as well as in the secondary market, will have a positive performance.

The reporter noted that affected by the shortage of supply, the copper foil plate has performed well in the secondary market recently. In the past seven trading days, Jiayuan Technology has risen nearly 30%, Nord shares have risen by more than 20%, and Chaohua Technology has risen by more than 10%.