Status quo and Prospect of China Lithium-Battery Aluminium Foil Supply and Demand

SHANGHAI, Aug 3 (SMM) - According to SMM statistics, China lithium-battery aluminium foil (“battery foil”) output stood at about 128,000 mt in 2021, accounting for about 2.8% of the country's total aluminium foil output. A year-on-year growth of battery foil recorded a high of 83%, far higher than other aluminium foil products.

Meanwhile, the new capacity of battery foil is also put into production at a fast pace According to SMM statistics, there are currently 15 disclosed battery foil projects under construction, which will be put into operation from 2022 to 2025, with a total capacity of 592,000 mt. In addition, some companies may convert the existing light gauge foil capacity into battery foil production capacity. China's battery oil capacity is expected to reach one million mt by 2025.

In terms of the downstream, battery foil is used in three major terminal fields, including new energy vehicle power battery, energy storage battery, and electronics battery, with power battery taking the lion’s share. And the structure is expected to remain so in the next few years. As an important part of China's power system reform and new energy power construction, energy storage batteries have been quick in ramping up the production, but it is unlikely to take over power battery in terms of total foil consumption in recent years.

In recent years, China's new energy vehicle industry has developed rapidly. In 2021, the power battery output stood at 220GWH, with a year-on-year increase of 165%. The year-on-year growth rate in the first five months of 2022 is also above 100%. The output of new energy vehicles power batteries has been growing rapidly, and the exports of lithium batteries continue to rise as well, supporting the long-term improvement in the demand for battery foil.

SMM believes that in recent years, the battery foil will maintain a tight balance between supply and demand based on the data available. Although the output of power batteries is growing rapidly and the growth rate is higher than that of battery foil, it is expected that the battery foil capacity will still be higher than the demand by 2025, which can meet the development demands in the new energy industry.

At the same time, although there is the problem of excess battery foil capacity, some aluminium foil companies still focus on the high-end light gauge foil due to the low yield and long account period of battery foil, and will not expand foil capacity blindly. At present, the light gauge foil and battery foil production lines can be easily transformed both ways. In recent years, as China's economy has been improving steadily, the disposable income of residents and the consumer confidence index have grown steadily, including the retail industry of consumer goods. The output of milk, cigarettes and other products has increased accordingly, heightening the demand for light gauge foil, which can offset the excess battery foil capacity. Therefore, the tight balance between supply and demand in the battery foil industry will be maintained.