Lithium copper foil is produced by electrolysis. It is mainly used as a carrier of negative active material and a current collector for electron collection and conduction in lithium batteries. In other words, it collects the current generated by the active material of the battery, in order to form a large current output. Copper foil for lithium battery accounts for 5%-10% of the total cost of lithium battery, but it has great influence on battery performance, especially on energy density and other parameters.

In recent years, the trend of thinning is becoming more and more obvious. Thinness leads to an increase in the energy density of the battery, with 6 microns and 4.5 microns increasing the energy density by 5% and 9% , respectively, compared with 8 microns. On the other hand, the thin can bring about the reduction of raw material consumption, which is beneficial to the reduction of battery cost. Slightly calculated 4.5 micron copper foil copper consumption is about 8 microns of about 60% , there is a very significant reduction. At present, the domestic power battery has been basically popularized 6 micron copper foil, some bibcock such as Ningde has begun to import 4.5 Micron, overseas is still to 8 micron-based. Lithium copper foil industry is constantly pursuing high quality, low thickness, process control, process management and equipment accuracy have put forward higher requirements, technical barriers continue to rise. At the same time, copper foil equipment investment is also high, double the dragon’s recent expansion plans, 10,000 tons of production capacity corresponding to about 70-10 billion yuan of equipment investment, in the lithium battery link higher than the anode and electrolyte. So it seems that lithium copper foil is still a technical and financial barriers to the mid-stream link.

Industry has not emerged absolute boss, market concentration is not very high, CR3 currently at 50% . But leading by virtue of technology, customers, or have a certain market voice, of which 28% longdian huaxin, nordisk shares 13% , Jiayuan shares 9% , the rest of the enterprise market share is less than 5% . Expand on the core technical barriers to lithium copper foil. Lithium copper foil mainly includes four major processes: dissolving copper-raw foil-post-treatment-cutting, of which the most critical and most difficult is the raw foil process, is also the technical core of all enterprises. The core process of the raw foil includes adding additives, making the copper ions in the solution adhere to the high-performance titanium cathode roller by low-voltage and high-current technology, gradually accumulating to the required thickness and forming the copper foil. The core equipment of electrolytic process is foil machine, the key technology is the cathode roller, mainly produced by Japanese and Korean enterprises. At present, the cathode roll produced by domestic equipment manufacturers can not reach the accuracy of overseas equipment, especially the gap below 6 microns is large. The future expansion of the industry is limited by the limited supply of equipment, mainly produced in Japan every year about 230-280 sets, corresponding to the copper foil new capacity of 60-70,000 tons. The production of overseas foil machine manufacturers has been scheduled for the next few years, coupled with the Japanese companies are less willing to expand production, to achieve a balance of supply and demand to continue to focus on domestic equipment technology iteration and catch up.

The copper foil link profit promotion mainly achieves through the technical iteration. The pricing model of copper foil follows the model of “Raw material cost + processing fee”. The processing fee depends on supply and demand, product technology and the bargaining power of the enterprise itself. From both sides, upstream similar commodities, downstream customers have a strong voice, copper foil links almost no bargaining power, want to reduce the cost of raw materials to increase profits by the road basically blocked; The source of excess returns is mainly from the increase in processing costs, such as thinness, brought about by technological iterations. Thin copper foil is difficult to produce, and the market is willing to offer a higher price. In November, the market estimated the processing cost of 8 Micron and 6 Micron Lithium copper foil to be 35,000/ton and 52,000/ton, respectively, with a price difference of nearly 50% , the profit margins are significantly different, with 4.5 microns and a whopping 70,000 tons. Thinning is not easy to achieve, want to get thinner copper foil, need to reduce the current load to ensure the accuracy of production, and high-precision production may lead to a corresponding increase in the frequency of maintenance, operating efficiency has been reduced; As the thickness of copper foil decreases, the tensile strength and compression deformation resistance of the product decrease, and the yield rate decreases. That is to say, just from the point of view of the foil, want to do thin, we have to face the efficiency and yield decline and cost increase, on the enterprise’s production and cost management constitute a test.

Much like the diaphragm, the copper foil needs to be tailored to the customer’s requirements, resulting in a loss of about 80% of the overall Capacity utilization. As thickness continues to fall, yields will also fall, with Capacity utilization at 6 microns and below falling by another 10% or so, and companies capable of mass production at 4.5 microns are even rarer, currently dominated by Nods and Jiayuan. From the point of view of the construction of production capacity, on the one hand, the limited quantity and output of high-quality equipment have limited the speed of large-scale production expansion of lithium-ion battery copper foil; on the other hand, the project construction cycle is generally about 2 years, coupled with the product certification cycle is usually 6 months, capacity can not be achieved in a short period of time a large increase. 2020 domestic lithium copper foil production capacity of 229,000 tons, and 21-year demand of about 190,000 tons, considering the average operating rate is generally 80% , the industry gradually reflects the situation of tight supply and demand. The current expansion plans of the industry’s major companies are expected to start production in the second half of 22 years. Given that capacity will still take some time to climb, the tight supply situation is expected to continue into 2023. Capital barrier is relatively high, high-quality equipment overseas monopoly, domestic equipment performance backward, capacity construction is not as good as demand, the yield efficiency is low, is it similar to the situation of the diaphragm? So the industry’s current logic or bullish Bibcock, mainly bibcock capacity is relatively adequate, and excellent process management and high-end products to bring more profit space. Similar to the diaphragm, whether there will be a break in the industry in the future, whether we need to continue to track the progress of domestically made equipment, and when we can realize large-scale localization of equipment, then the industry’s capacity constraints will be broken, at the same time, costs will be reduced, link profits will be improved.

It should be noted that although the copper foil market looks somewhat similar to the barrier of the diaphragm, the technical barrier of the diaphragm will be higher and the market pattern will be more concentrated, although they are constrained by the tight supply of equipment and difficulties in expanding production, but the logic of investing can not be copied. Also mention PET copper foil that is of interest to the market. The structure of PET copper foil is similar to that of a sandwich, with copper at both ends and a base layer of PET in the middle. The finished product is generally about 4 microns thick, of which the Sandwich Layer (PET) is 2 microns and the bread (copper) at both ends is 1 microns. The advantages are that the copper consumption is reduced by half, the weight is reduced, the energy density of the battery is increased, and the sandwich layer has a flame-retardant structure, which can improve the safety of the battery. But such a complex process, it is bound to bring high processing costs, but also lower production efficiency, sandwich layer will increase the battery resistance to a certain extent. From the current industry validation, PET is still in the early stages of the industry, we can keep an eye on it. Research Copper Foil, in fact, pay attention to two major directions, thinning and equipment localization process. Light and thin can better reflect the technological gap between enterprises, can be seen directly from the gross profit rate; localization will shake the industry’s current bottleneck, change the pattern of supply and demand, on the impact of enterprise profits. 

By Ryan Chau

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