Far-reaching Impact of The Fast-growing Lithium Foil Market on The Development of The Copper Foil Industry



Far-reaching Impact of The Fast-growing Lithium Foil Market on The Development of The Copper Foil Industry

What is the profound impact of the fast-growing lithium foil market on the copper foil industry and market? How long can the prosperous lithium foil market last? When will the imbalanced supply and demand of lithium foil be solved? When will the acute supply shortage of standard foil be relieved? How will the product mix of copper foil change in the next few years? All these are important topics of great concern for the copper foil industry and its downstream industries including the copper clad laminate industry, the printed circuit board industry and the lithium battery manufacturing industry.

We can use reliable survey statistics to help answer the above questions.

1．Great changes to the copper foil industry and market from the perspective of production and sales data

First of all, based on industry survey statistics, let's figure out "how much capacity and output will the domestic copper foil industry have after several years of expansion. Then, based on the data, let's move to the central topic: what's the far-reaching impact of the fast-growing lithium foil market on the development of the copper foil industry in China and even the world?

1．1 Statistical data indicates three changes.

A piece of important literature entitled "Key Points of a Survey on the Capacity, Lithium and Standard Foil Capacity Ratio of Nationwide Copper Foil Companies from 2016 to 2018 (hereinafter referred to as the "Key Points") and signed by "Copper Foil Branch Secretariat" was published in Issue 4 of 2016 of the "Copper Foil Information" magazine. It has provided valuable information for those who are concerned about this issue. The Key Points are summarized as follows:

(1) Great changes in capacity. In three years from 2016 to 2018, China's electrolytic copper foil enterprises (including enterprises built by foreign-funded enterprises in Mainland China, the same below) will increase electrolytic copper foil capacity by 159,300 tons from 282,300 tons in 2015 to 441,600 tons in 2018. The three-year average annual growth rate is up to 16.3%.

(2) Great changes in product mix. In three years from 2016 to 2018, lithium foil capacity will soar to 176,000 tons. In 2015, China's domestic lithium foil capacity was only 45,000 tons, accounting for only 15.9% of the total capacity. But in 2018, this figure is expected to climb to 39.6% and the "4:6" capacity ratio of lithium foil to standard foil (copper foil for CCL and PCB respectively) will be formed.

(3) Breaking the balanced supply and demand of standard foil. In 2016, we were faced with an unprecedented situation. On the one hand, the demand for lithium copper foil grew fast and suppliers could make more profits. On the other hand, there were a large number of large irrational lithium foil-related construction activities. This has broken the balanced supply and demand of standard foil and resulted in the supply shortage of standard foil, and the situation may last the next few years. Statistical data shows that the increased capacity of domestic or overseas standard foil is very small in three years from 2016 to 2018, which is in obvious contrast with the rapid growth of domestic lithium foil capacity in the subsequent years. The increased capacity of domestic standard foil in three years from 2016 to 2018 will only account for 21.4% of the total increased capacity (note: the increased capacity of domestic lithium foil is 307%). Domestic standard foil capacity was 237,300 tons in 2015 and will be increased to only 280,000 tons in 2018.

Table 1 shows the statistical and forecast data of China's total capacity of electrolytic copper foil, lithium foil capacity, standard foil capacity, and their capacity ratio from 2015 to 2020. Most data is quoted from Key Points. Forecast data for years after 2018 (including 2018) is obtained through modification and addition to the data in Key Points.

Table 1 Statistical and forecast data of China's total capacity of electrolytic copper foil, lithium foil capacity and standard foil capacity from 2015 to 2020

Based on the statistical and forecast capacity data provided in Table 1, Table 2 lists statistical output data of the two kinds of copper foil in 2015 and their output data from 2016 to 2020 estimated based on the capacity utilization rate in each year.

It can be seen from Table 2 that:

(1) China's copper foil output is predicted to grow explosively in five years from 239,000 tons in 2015 to 451,000 tons in 2020, up by 88.7% than 2015. Lithium foil output will see the most obvious and largest growth and increase by more than 3 times (319%) in 2020 (176,000 tons) than in 2015 (42,000 tons).

(2) China's copper foil output (mainly lithium foil output) is predicted to grow the most in 2017 and 2018 among five years from 2016 to 2020. The growth rate will be 102% in 2017 and 69.7% in 2018.

(3) After a substantial growth of lithium foil output in 2017 and 2018, the ratio of China's lithium foil output to standard foil output will change dramatically from 19.1:80.9 in 2016 to 39.4: 60.6 in 2018.

Table 2 Statistical and forecast data of China's lithium foil output, standard foil capacity and their ratio from 2015 to 2020

After the copper foil market has undergone changes in recent years due to some special reasons worthy of discussion and thinking, China's copper foil production capacity is growing substantially at a rate significantly faster and greater than other major copper foil production countries and regions in the world. This phenomenon will continue for years to come and result in an increased ratio of China's copper foil (especially lithium foil) capacity and output to the global total capacity and output in the next few years. In order to illustrate this, I referred to the international and domestic statistical data to provide a list (See Table 3) of statistical and forecast data of global and Chinese copper foil output from 2012 to 2020.

Global and Chinese Copper Foil Output from 2014 to 2020.

Year2014201520162017201820192020 GlobalTotal capacity62.059.662.274.291.496.895.3 Total output42.846.949.860.380.782.985.1 Lithium foil output/ total output7.8/18.29.8/20.911.2/22.521.3/35.333.9/42.034.5/41.635.1/41.2 Mainland ChinaTotal capacity28.5627.6329.9136.8146.2649.7650.90 Total output/global output21.58/50.423.85/50.925.7/51.631.7/52.642.6/52.443.8/52.845.1/53.0 Lithium foil output/global lithium foil output3.15/40.44.2/42.94.9/43.89.9/46.516.8/49.617.4/50.417.6/50.1

Note: Summarized and estimated in February 2017 based on global and domestic copper foil (including lithium foil) capacity and output data

It can be seen from Table 3 that:

(1) From 2012 to 2014, China's copper foil production capacity (output) accounted for about 50% of the global total output. But as lithium battery output has increased significantly since 2015, the ratio of China’s lithium foil to global lithium foil has increased continuously and is expected to reach about 53% in 2020.

(2) In the next few years, China will see the fastest growth in lithium foil output. The ratio of China's lithium foil to global total lithium foil will increase from only about 38% in 2012 to about 50% in 2018.

2．The profound impact of great changes in the product mix of copper foil on the development of China's copper foil industry

The core information conveyed by the above statistical and forecast data is great changes to the product mix of China's copper foil industry in recent years, especially in the next few years. These subversive changes has exerted and will continue to exert a profound impact on the production management, product mix, production system, technical progress as well as international status of China's copper foil industry.

2．1 Impact on the production management of China’s copper foil industry

In the past two years, with the implementation of China's new energy vehicle policy and the expanded production of new energy vehicles, the Chinese market has seen a growing demand for copper foil, which is used for a negative electrode of lithium-ion batteries. Therefore, the poor-performing copper foil industry in China and the world has become prosperous since the autumn of 2015.

What impact and changes will this bring to the copper foil industry? A head of a large domestic copper foil enterprise vividly described the changes, "In 2016, driven by the new energy vehicle policy, our copper foil industry has undergone tremendous changes from hell to heaven". Secretary-General Leng Daguang of the Copper Foil Branch of the China Electronic Materials Association recently published a paper, in which he stated that tremendous demand changes for the copper foil industry has promoted the industry's management changes in five aspects: 1) As years-long difficulties are ended, copper foil enterprises have turned from loss to profit; 2) As the problem of a long accounting period for upstream and downstream supply of the copper foil industry is solved, the enterprises have achieved normal production, management and flow of funds; 3) The enterprises can gather more funds for technological transformation and R&D and healthy and efficient management; 4) The enterprises have dramatically improved the utilization of production capacity and made full use of equipment potential; 5) The growing demand has promoted the improvement of domestic copper foil production equipment manufacturing and strengthened the domestic raw material supply chain for copper foil.

2．2 Impact on the product mix of China's copper foil industry

A few years ago, lithium foil was only regarded as a niche segment of China's copper foil industry, when its production and sales were far lower than standard foil's. But today, lithium foil has become a major special variety of copper foil with its production and sales accounting for about 30% (calculated based on estimates in 2017) of the industry's total production and sales. A few years ago, only a few domestic enterprises had an annual capacity of thousands of tons of copper foil, while in the next few years, six or seven domestic enterprises (including foreign-funded enterprises in Mainland China) will have an annual capacity of tens of thousands of copper foil. This has, for the first time, resulted in the division of labor among domestic copper foil enterprises into the production and manufacturing of lithium foil and standard foil. Some large and medium-sized enterprises have shifted to the production of lithium foil, or become a professional lithium foil production enterprise. This phenomenon is seen both in and outside China (For example, South Korea's LS MTRON has shifted 90% of its copper foil production business to lithium foil in the past two years). This change to division of labor will promote enterprises to specialize in certain areas such as lithium foil production, supply, technology development and equipment. Persistence makes enterprises stronger in a competitive market.

2．3 Promoting greater technological progress of China's copper foil industry

From the perspective of China's entire copper foil industry, the fast-growing demand for lithium foil has ended the years-long management difficulties of many Chinese copper foil enterprises. The enterprises can gather more funds, creating a good condition for technological innovation.

Domestic copper foil enterprises mainly engaged in lithium foil production and operation are facing and will face risks such as industry investment, market competition and survival of the fittest in the coming years. Only by promoting technological progress can enterprises develop continuously. Currently, the worldwide lithium foil market competition has exposed a gap between domestic and foreign copper foil enterprises in terms of technology, product quality, the pace and level of product upgrading. But we can also see that while developing lithium foil products in recent years, China's copper foil manufacturing industry has been more active in the research of lithium foil technology and theory. The publishing of relevant papers and the application and introduction of relevant parents have become more frequent. These high-level papers published are from universities, research institutions as well as domestic copper foil production enterprises. It shows major progress of the domestic copper foil industry in the research of lithium foil technology and theory.

Domestic copper foil enterprises mainly engaged in the production and operation of standard foil can be inspired from and use technical solutions to lithium foil thinness, high temperature and high tensile strength and high heat resistance problems to improve the performance of their standard foil products. We should see that several traditional Japanese large enterprises with world-leading copper foil technology are developing the emerging lithium foil products and their management strategy is different from, or even opposite to that of large copper foil enterprises in other Asian countries/regions. They are more focused on improving the R&D and performance of high-grade standard foil. Over the past two years, they have accelerated the launch of new varieties of high frequency and high speed copper foil, super thin copper foil, and high performance copper foil for HDI and flexible plates, and shown more obvious advantages. If Chinese copper foil enterprises don't accelerate technological progress of standard foil in the new copper foil market, the technological gap between them and leading Japanese enterprises will become bigger and they will further occupy different levels of standard foil segments.

2．4 Improving the international status of China's copper foil industry

The rapid growth of lithium foil production in China has increased the ratio of China's copper foil (especially lithium foil) output to the global total output. A growing number of domestic copper foil enterprises will make it to the Global Top 10 and their rankings will be improved. This change will improve the discourse power (including price dominance in general categories of lithium foil, discourse power in the formulation of standards and market orientation for low and medium varieties) of China's copper foil industry in the global market, expand its exports of lithium foil and increase its international market share.