Entering 2022, the new energy vehicle market will continue its high growth trend, driving a significant year-on-year increase in power battery shipments. The market demand for superimposed lithium battery energy storage and other applications such as electric two-wheelers has grown, and the demand for lithium battery copper foil has remained strong. It is expected that, driven by the strong global new energy vehicle terminal production and sales and energy storage market demand, China's lithium battery copper foil shipments will exceed 1.1 million tons by 2025, and the compound growth rate from 2021 to 2025 will exceed 40%.
Driven by the huge market demand, the lithium battery copper foil market continues to heat up, lithium battery copper foil companies have accelerated the pace of capacity expansion, and the scale of new production capacity is huge, and the release rate of new production capacity has been significantly accelerated. With the continuous expansion of lithium battery copper foil production capacity and the increase of new entrants, and power battery companies putting forward higher requirements for copper foil in terms of product performance and cost reduction, the future competition pattern of lithium battery copper foil market will also change. Overall, the current China lithium battery copper foil market presents the following four characteristics.
1. Lithium battery copper foil prices rose sharply
Lithium battery copper foil accounts for about 5-10% of the cost of lithium battery materials. However, driven by the rise in raw materials and processing fees and the growth of downstream market demand, the price of lithium battery copper foil has risen sharply in recent years, and the cost of lithium batteries has risen rapidly. In 2021, the sales volume of new energy vehicles in China will be 3.52 million, a year-on-year increase of more than 150%, driving the shipment of lithium battery copper foil to reach 280,500 tons, a year-on-year increase of 122.9%.
In addition, with the continuous growth of new energy vehicle sales, the demand for car batteries in power batteries continues to increase. Our website has compiled some articles related to car batteries, such as how many volts is a car battery, car battery recycling, etc. Under the influence of the epidemic and tight supply and demand, as the price of electrolytic copper has more than doubled and the superimposed processing fee has risen, the price of lithium battery copper foil in early 2022 has risen by 40% compared with 2020.
The rising price of copper foil has led to an increase in its share of material costs in batteries. From the product side, the cost ratio of lithium battery copper foil in 5-series ternary batteries in the first half of 2022 has risen to the third place, second only to cathode and electrolytes. In addition, the cost ratio of lithium battery copper foil in other material systems has also increased to varying degrees, becoming a strategic resource for power battery companies to compete for.
2. Lithium battery copper foil production expansion momentum is rapid
The two major markets of new energy vehicles and lithium battery energy storage maintain a high degree of prosperity, driving the capacity expansion of the lithium battery copper foil industry to accelerate. From the perspective of production capacity, since 2020, copper foil companies including NUODE, DEFU, JIAYUAN, TONGGUAN, and Zhongyi Technology have been accelerating the pace of capacity expansion. In addition to copper foil companies, upstream copper companies have made use of their competitive advantages in copper raw materials and copper processing to enter the copper foil industry to build lithium battery copper foil production capacity and develop new business growth points.
According to incomplete statistics, in 2021, the number of lithium battery copper foil capacity expansion enterprises in China will exceed 25. Compared with 2020, the newly planned capacity scale at the beginning of the year will exceed 50%. It is estimated that by 2025, the total production capacity of lithium battery copper foil in China will exceed 2 million tons, a year-on-year increase of more than 6 times. The future market competition of lithium battery copper foil will be more intense.
From the product side, in order to further improve the energy density of batteries, power battery companies require lithium battery copper foils to be extremely thin, and to speed up the introduction of copper foils below 8 μm. From 2018 to 2021, in the product structure of China's electric copper foil market, the market share of 6μm copper foil has increased from 20.5% to 66.0%. 8μm copper foil dropped from 79.5% to 25.1%. The 4.5μm ultra-thin copper foil has risen from zero to nearly 10%.
At present, lithium battery copper foil companies are accelerating the industrialization of 4.5μm ultra-thin copper foil, and leading power battery companies in the world are also accelerating the introduction of 4.5μm copper foil, indicating that the downstream market demand for ultra-thin copper foil continues to heat up. In terms of product performance, China's domestic lithium battery copper foil is not inferior to overseas brands in terms of tensile strength, elongation, surface roughness and other performance advantages. It has obvious competitive advantages in ultra-thinning and cost control, which provides a guarantee for Chinese copper foil to enter the international market.
3. Capacity expansion drives demand for copper foil equipment
The large-scale expansion of China's lithium battery copper foil production capacity directly drives the market demand for upstream copper foil production equipment, providing good development opportunities for Chinese copper foil equipment companies. Previously, the core production equipment of Chinese copper foil companies, such as cathode rollers, mainly relied on imports, which hindered the construction and release of China's lithium battery copper foil production capacity, and the equipment investment cost remained high.
With the growth of downstream market demand and the efforts of local copper foil equipment companies, the performance of China's lithium battery copper foil equipment products has been greatly improved in recent years, which has greatly eased the pressure on Chinese copper foil companies to expand production. At present, Chinese copper foil equipment companies have achieved localization of all process equipment, and the overall localization rate of Chinese copper foil production lines has exceeded 95%. In the future, with the release of new global copper foil production capacity, Chinese equipment suppliers will also increase their layout in overseas markets and enter the supply chain of global copper foil companies.
4. Composite copper foil is in the initial stage of industry development
The core driving factors for the industrialization of composite copper foil are safety, low cost and light weight. In terms of safety, since the middle layer of the composite copper foil is an organic layer, being pierced can effectively avoid short circuits of the cells, thereby improving battery safety. In terms of cost reduction, under the condition of complete technology, composite copper foil is expected to achieve less than 4.5 yuan per square meter after mass production, which is expected to reduce the manufacturing cost by 40% compared to traditional copper foil. In terms of weight reduction, composite copper foil is expected to achieve a mass reduction of over 50%.
The technical route of composite copper foil mainly includes two categories: PET and PP substrates, and the layout companies include NUODE, Baoming Technology, etc. On the whole, the composite copper foil is still in the period of technical improvement, and the large-scale volume is expected to be after 2023. It is estimated that by 2025, the market demand for composite copper foil will reach 1.0-1.2 billion square meters, and the market penetration rate is expected to reach 4%-5%.