Lithium Copper Foil: Lithium anode current collector material, “Extremely thin”in line with the energy density promotion trend (I) lithium copper foil: Lithium anode current collector preferred material, the Bright Pearl copper foil that benefits from the lithium battery market explosion refers to the extremely thin copper strip or copper sheet with thickness less than 200 ΜM, which is produced by Electrolysis, calendering or sputtering, it is widely used in electronic circuit, lithium battery and other related fields. Electrolytic copper foil is a kind of metal copper foil produced by electrolysis with copper material as the main raw material. The copper material is dissolved into sulfuric acid and copper solution, and then the copper sulfate solution is electrodeposited in a special electrolytic equipment to make the original foil. Electrolytic copper foil is a key functional base material in the electronic manufacturing industry. It is mainly used in the production of lithium-ion Battery and Printed Circuit Board (PCB) . Among them, lithium copper foil has become the first choice of the lithium-ion battery because of its good conductivity, electrical properties, good machining performance, soft texture, mature manufacturing technology and cost advantage. Calendered copper foil is made by repeated rolling and annealing of high precision copper strip using plastic processing principle. Its ductility, bending resistance and electrical conductivity are better than those of electrolytic copper foil. According to the simulation results, the cost of lithium copper foil is about 8.6% . According to the data disclosed by S1 technology, according to the sales unit price of copper foil for Lithium batteries supplied to Ningde Times, as well as the direct material cost and sales volume of Ningde Times battery system, etc. , data simulation estimates that 6μm lithium copper foil in 2019 and 2020 accounts for about 8.60% and 8.66% of the direct material cost in Ningde era. Therefore, we reasonably estimate the cost of 6μm lithium copper foil in battery system, about 8.6 per cent of direct material costs.

Copper Foil can be classified according to production process, application area, thickness and surface condition. According to the different production process, can be divided into electrolytic copper foil, calendering copper foil. Electrolytic copper foil is made of copper raw material into copper sulfate solution, and then electrodeposited into copper foil by direct current with electrolytic equipment. According to the different application fields, can be divided into lithium copper foil, standard copper foil. Copper Foil for lithium batteries is mainly used as a current collector, which is an important part of electrode structure in lithium batteries. It not only acts as a carrier of negative electrode and active material, but also acts as a current collector, standard Copper Foil is a thin layer of copper foil deposited on the substrate of a printed circuit board. It is one of the important basic materials for copper clad lithium-ion battery and printed circuit board, and acts as a conductor, generally thicker than lithium copper foil, mostly in 12-70μm, one side rough and one side bright, smooth for printed circuit, rough surface and substrate combination. According to the thickness of copper foil, it can be divided into ultra-thin copper foil (≤6μm) , ultra-thin copper foil (6-12μm) , thin copper foil (12-18μm) , conventional copper foil (18-90μm) and thick copper foil (> 70μm) . At present, ultra-thin and ultra-thin copper foils are mainly used for lithium-ion batteries to meet the need of high energy density technology. According to the different surface conditions can be divided into double-sided smooth copper foil, double-sided Mao copper foil, double-sided thick copper foil, single-sided Mao copper foil and, very low profile copper foil (VLP copper foil) . (2) industrial chain: Industrial Chain Short, vertical extension difficult copper foil industrial chain can be divided into three links: upstream raw materials, mid-stream processing and manufacturing, and downstream production and application. Copper Foil, the most important raw material for copper, with commodity properties, and copper materials account for about 80% of copper foil costs, so copper, copper foil raw material costs are more sensitive to copper price fluctuations. In the Middle End, the electrolytic process can produce lithium battery and PCB copper foil, which is mainly used in the field of lithium battery and electronics. At the same time, the copper foil produced by calendering process has higher purity, smoother surface and is more favorable for electric signal transmission, widely used in electronics.

Lithium copper foil industry chain is short, vertical integration extension is difficult. On the one hand, because the manufacturers of lithium-ion battery copper foil in the middle reaches of the upper reaches are commodities copper, there are few processing links in the industrial chain, and the manufacturing links of copper foil have occupied most of the added value in the overall industrial chain, on the other hand, the capital expenditure of lithium copper foil production line is large, which belongs to the heavy assets link, corresponding to the single GWh investment is equal to the membrane. (3) production process: The process of producing copper foil is the core process, and the production of lithium-ion copper foil by replacing the core equipment made in China mainly includes four steps: dissolving copper to produce liquid, producing the copper foil, surface treatment and cutting inspection. ELECTROLYSIS, the manufacture of copper foil at the present stage mainly uses copper material as the main raw material, which is dissolved by sulfuric acid to produce a copper sulfate solution, and then the copper sulfate electrolyte is electrodeposited by direct current in the cathode and the roller to produce the original foil, then according to the actual needs of its surface coarsening, curing, heat-resistant layer, corrosion-resistant layer, anti-oxidation layer and other surface treatment, lithium copper foil mainly for the surface, machine anti-oxidation treatment, and then according to the need for cutting, and you end up with the finished product. Copper Solution Process: Electrolyte preparation, in a special tank, with sulfuric acid, deionized water made of copper into copper sulfate, solution for the foil process to provide electrolytic solution in line with the process standards. Foil production process: In the foil machine electrolyzer, copper sulfate electrolyte in the role of direct current, copper ions to get electrons, in the cathode roll surface electrodeposition and made the original foil, after continuous rotation of the Cathode Roll, pickling, washing, drying, stripping and other processes, and copper foil continuous stripping,Unrolled to form rolled foil. POST-TREATMENT PROCESS: After the original foil surface treatment processes such as acid cleaning, organic anti-oxidation, so that the product quality technical index, mark in line with customer requirements. Cutting process: according to the customer for Copper Foil Quality, width, weight requirements, copper foil cutting, inspection, packaging. Know-how is mainly embodied in the selection of electrolyte and additives, process formula, production equipment and production process control. Additive technology: additive is one of the core technologies in the production of electrolytic copper foil. Different types of electrolytic copper foil products need different additives, is the production of high-performance high-quality special purpose copper foil essential key materials. In the actual production process, current density, electrolyte temperature, Ph value, cleanliness and the type and formula of additives are one of the most important control factors, it is an effective measure to obtain a high quality electrolytic copper foil with compact structure, uniform grain size, compact arrangement and little impurity. The main equipment for producing foil consists of cathode roller (titanium roller) , anode groove, anode plate, transmission and control system, Cathode Roller on-line polishing and grinding system. The cell voltage of the foil generator is not only related to the structure of the foil generator, the distance between the anode and Cathode, the anode material, the composition of the electrolyte, the arrangement of the equipment and the way of power supply. Therefore, the selection, arrangement, debugging and process accumulation of foil-generating equipment is a systematic project, which is one of the key processes in the production of lithium copper foil. Production Process Control: High Quality, high performance copper foil production process, process parameter design is very important, it mainly includes concentration of copper ion, concentration of sulfuric acid, temperature of electrolyte, flow rate of electrolyte, selection of additives, combination and adding method, current density, etc. , the various parameters act independently, influence each other and complement each other. Equipment is one of the key factors to produce high quality copper foil continuously and stably. At present, in the core production equipment such as cathode roll manufacturing, domestic manufacturers in materials and manufacturing methods, compared with the international advanced level, there is a certain technical gap. In recent years, China has increased the R & D and investment in related technologies, and the gap with foreign countries is gradually narrowing. At the same time, some copper foil enterprises have also, through their own exploration, concluded a set of production processes that match the domestic equipment, thus, to a certain extent, it makes up the shortage of production equipment. The core of electrolytic copper foil technology lies in the foil equipment: Cathode Roller, anode slot, foil machine and so on. Whether lithium copper foil can be made thinner or not is directly related to the performance precision and matching of the core equipment such as cathode roller and anode slot. For example, the crystal structure of titanium roller surface determines the crystalline state of electrolytic copper foil. Cathode Roller Titanium layer high Surface roughness, fine grain, electrolytic deposition, copper layer is easy to form fine grain, ultra-thin toughness foil material, conversely, copper foil crystal thick, thick foil. Therefore, foil production equipment is very expensive, accounting for nearly half of the total cost of production equipment. At the same time, the cathode roll is difficult to manufacture, difficult to expand production, long delivery cycle, as lithium copper foil future expansion of one of the obstacles.

Equipment imports from Japan and South Korea, home-made alternative to speed up the way out. Japanese and Korean enterprises have technology, advantages and product advantages in the field of copper foil equipment production. More than 70% of the world’s cathode rollers come from Japanese enterprises such as Nippon Steel and Mifune, the supply of equipment led to copper foil expansion cycle increased. At present, Japanese manufacturers of cathode and cathode rollers have already placed orders to 2024, and there is no new production capacity to meet the domestic demand for lithium-ion battery copper foil expansion. Against this background, some domestic enterprises have seized the opportunity, through the combination of independent research and development and technology introduction, the copper foil key equipment can be replaced by domestic ones, such as Shanghai Hongtian, etc. . 4) industry trend: “Extremely thin”technology iteration in line with the improvement of lithium electrical performance and the trend of lowering cost thickness is one of the main performance indicators of lithium copper foil, the thinner the thickness, the lighter the mass per unit area of copper foil, the lower the resistance, the higher the energy density of the battery. However, as the thickness of copper foil becomes thinner, the tensile strength per unit width and the compressive strength per foil surface are reduced, and the possibility of copper foil breaking or cracking is relatively high, which may affect the safety of lithium battery. Therefore, under the premise of ensuring the safety of the battery, the thinner the copper foil of the lithium battery, the lighter the weight. In addition, the thickness uniformity, tensile strength, surface wettability and other characteristics determine whether the lithium battery copper foil can be commercially used, on its capacity, yield, the size of resistance, the use of life has a direct impact. Thinning is an important trend in the development of lithium copper foil. In theory, the thinner the copper foil, the lower the internal resistance, the stronger the conductivity, corresponding to the battery energy density, cycle life is better. In order to improve the mileage of new energy vehicles and solve the anxiety of mileage in the terminal consumer market, high safety and high energy density lithium-ion battery have become the focus of the layout of battery enterprises and the main melody of the future development of the lithium power industry, the thinner 4.5 m lithium copper foils are opening up to applications along with this trend. In the future, as the industrialization technology of 4.5 m lithium copper foil is gradually mature and the application technology of battery enterprises is gradually improved, the application of 4.5 m lithium copper foil will be expected to gradually increase. According to the calculation, without changing the other conditions, the energy density of lithium copper foil was increased by 5%/9% from 8 m to 6/4.5 M. The use of thin copper foil can not change other battery conditions can be directly increased by 3%-5% of the battery energy density and the amount of active material space, so in the cell volume unchanged, thinner copper foil can be increased, more miles on new energy vehicles. CommunicationIt is calculated that the quality of the lithium battery can be reduced effectively by replacing the lithium of 8 μm with the copper foil of 6 Μm and 5 μm with the thin copper foil of 5.3% and 8.2% respectively, and the quality and energy of the lithium battery can be increased by 5.3% and 8.2% , respectively, if 4.5 μm copper foil is used, the energy density can be increased by an additional 1% . As a result, the lower energy density of the lithium iron phosphate battery requires more copper foil for switching. 6 μm becomes the mainstream choice for downstream battery factories, and 4.5 μm is ready to be launched. After four years’development, 6ΜM LITHIUM-ION COPPER FOIL has rapidly grown into the mainstream of the market, and its output has increased from 14% in 2017 to 34% . At the same time, the technical breakthrough of 4.5 μm lithium-ion battery copper foil has been achieved in China by 2020, opening up the application space, and the output is 4745 tons, 3.1% of the total production of copper foil for Lithium batteries. Ningde Times, byd and other power lithium battery leading enterprises such as 6μm lithium battery copper foil has been applied mature and fast, switching, other power lithium battery enterprises are also accelerating the application of 6μm lithium battery copper foil, ≤6μm extremely thin lithium battery copper foil products, it has been applied in leading enterprises step by step. At the same time, the supply gap is easily affected by factors such as the expansion period of copper foil plant. According to GGII’s statistics, the permeability of lithium copper foil ≤6μm was 50.4% in 2020. In the first half of 2021, the permeability had reached 55.6% . The world’s new capacity of 6 μm or less is concentrated in Chinese mainland. According to the Chinese mainland, by the end of 2020, the global production capacity of copper foil for lithium battery was 121,199,000 tons.

At present, only a few enterprises such as Jiayuan and Nods have the ability to realize the real scale supply of 4.5 μm copper foil. In recent years, some Japanese and Korean enterprises have realized the production of 1.5 um copper foil, but they are limited by the slow progress of overseas battery factories in the application end, extremely thin copper foil is mainly used in PCB field or special battery. Domestic manufacturers are also actively promoting the extremely thin copper foil of 4.5 μm, but most of the copper foil enterprises are still in the stage of research and development or small-scale trial, small-scale supply mainly to send samples for testing, at present, only a few companies such as Jiayuan technology and Nordisk (the main customer is Catl) have realized mass production and shipping. (5)“Cost + processing fee”PRICING MODEL: The price elasticity of raw materials is small, the supply and demand determine the processing fee of lithium-electric copper foil adopts “Copper price + processing fee”pricing model, and the gross profit rate is less sensitive to the fluctuation of copper price. The industry adopts the model of “Copper price + processing fee”for pricing (generally based on the copper price of m-1 month, and some of the first customers based on m-2 month) , and uses the production model of “Production by sales”for production, therefore, in this pricing and production model, copper foil manufacturers can timely and fully transmit the copper price fluctuation downstream, and the operating margin is mainly determined by the difference between the processing fee of the company and the supplier, that is, “Company processing fee-supplier processing fee”, copper price changes on the company’s operating margin, less impact. We take Zhongyi technology as an example to analyze the sensitivity of copper price fluctuation to the change of company’s gross profit rate. The sensitivity is only about 0.1, which indicates that the sensitivity is weak.

The processing cost of lithium copper foil is affected by market supply and demand, product specifications, application requirements and other factors. Product Specifications: different specifications of the product processing costs vary greatly, mainly refers to the lithium copper foil key performance indicators such as, thickness. The thinner the copper foil, the better the performance, the more difficult the processing, the higher the processing cost. For example, the processing cost of 6μm lithium copper foil is generally higher than 8μm lithium copper foil, and lower than 4.5 μm lithium copper foil, at the same time, the processing cost of lithium copper foil used in new energy automobile lithium battery industry is higher than that used in digital, battery and energy storage battery. Market Supply and demand: processing costs will eventually be affected by market supply and demand. At present, the lithium battery copper foil market is in the lower reaches of the new energy automobile, and the car market is driving high demand growth. The lithium battery copper foil market is in tight supply and demand. Companies in the same industry have accelerated the expansion of production. The industry as a whole shows insufficient high-end production capacity, the structural imbalance between supply and demand in the low-end overcapacity has led to a rise in copper and foil processing costs so far this year, with the head of the enterprise capacity release, supply and demand tensions are expected to ease. Customer requirements: Different customers have different requirements on product specifications, applications and performance indicators. The higher the requirements for product specifications and performance, the more complex the production process, the higher the processing costs required by the company. (Source: Future think tank)2. Demand Side: power + Energy Storage multi-wing flying, li-ion battery copper foil demand takeoff benefit from the rapid growth of the lithium-ion battery market scale, li-ion battery copper foil demand has maintained a steady growth trend. In 2020, China shipped 146,000 tons of lithium copper foil, an increase of 17.8 percent year-on-year, according to Gao, the Research Institute for Industrial Research and Development (GGII) .

Power Lithium: Global Development of new energy vehicles in the first year, lithium demand incremental ballast domestic market: Global new energy vehicles main battleground domestic sales continue to exceed expectations, 2021 sales are expected to reach about 3.3 million units. Sales in China totaled 2.157 million vehicles in the first three quarters, up 1.8 times and 1.9 times, respectively, according to the 2021. The penetration rate of cumulative sales increased to 11.6 percent, and the average monthly sales volume in the fourth quarter is expected to be close to 400,000, we expect full year sales to fall to around 3.3 million units. High-quality supply coupled with rising demand, electric vehicle consumption consensus. According to the latest data, the penetration rate of domestic electric vehicles reached 17.3% in September, exceeding 10% in total. With the gradual decrease of cost, the performance-to-price ratio has become prominent, and consumers’acceptance of electric vehicles has increased, new Forces at the supply end, the traditional vehicle enterprises to accelerate the transformation, the Internet, into the war, the intelligent network network with the support of high-quality supply to further promote demand. We expect the domestic market for new energy vehicles to become, a benign market driven by endogenous consumption, with a sustained boom and a medium-term target of 20 percent in 202320222023.

(2) Energy Storage Lithium Battery: the Energy Storage Market with dual-carbon background has broad prospects. The main application areas of lithium battery for energy storage include grid-side energy storage, household energy storage and Communication Base station (backup power supply) energy storage. Driven by the domestic and overseas grid energy storage and communication energy storage market, China’s energy storage battery shipments have grown rapidly in the past two years. In 2020, shipments of energy storage lithium batteries were 16.2 gwh, up 70.5 percent year-on-year, according to data from the Institute of Advanced Industrial Research and development (GGII) . GGII expects China’s Energy Storage lithium-ion batteries to maintain high growth in the next five years. On the eve of the large-scale development of electrochemical energy storage industry, the scale of installation has stepped into the fast lane. In 2011-2020, China has achieved an annual compound growth rate of 55% , and by 2020, the installed capacity of electrochemical energy storage has reached 3.27 gw. At the same time, according to the national strategic development plan, the “14th five-year plan”is exactly the time for the large-scale development of the energy storage industry. During this period, the energy storage development goals include the wide application of energy storage projects, the rapid upgrading of technical levels, and the improvement of the standard system, and form a complete industrial system.

Growth of installed capacity guaranteed under energy revolution. According to Wood Mackenzie, the high growth over the next 10 years is projected to be a compound annual rate of 31 per cent. The cumulative scale of China’s electrochemical energy storage and installation is expected to reach 57.4% in the next five years under a conservative compound annual growth rate, under ideal conditions, it is expected to reach 70.5% , achieving real ultra-high-speed growth. (3) CONSUMPTION OF LITHIUM-ION BATTERIES: demand has picked up steadily, with 5G and emerging sectors driving growth. 3C consumer batteries are important applications of lithium-ion batteries. Before the explosive growth of new energy automobile industry, digital battery has been the main application field of lithium battery in China, occupying the majority of shipments in the market. In 2015-2017, with the trend of intelligentization, digital products are constantly updated, and new product categories are introduced, making the lithium battery market in the digital field keep low-speed and steady growth. In recent years, the increasing popularity of 5G technology in mobile phones and the rise of various wearable smart devices, power tools, electronic cigarettes and other emerging markets have led to a steady increase in the consumption of lithium-ion batteries. (4) small power market: Lithium battery New Blue Ocean market small power lithium battery mainly refers to the power battery used for electric bicycles and other light vehicles. In recent years, as the cost of lithium batteries, lithium batteries relative to lead-acid batteries performance advantages gradually highlighted, electric two-wheeled vehicle market ushered in a vigorous period of development, lithium-ion battery began to gradually replace lead-acid batteries, electric two-wheeled vehicles become the new blue ocean market for lithium-ion batteries.

5. Demand Measurement: The power and energy storage markets are the first and second growth drivers of lithium-ion copper foil. Key Assumptions: POWER MARKETS: In the future, China, Europe and the United States will remain the three major global consumer markets for new energy vehicles, the global market for new energy vehicles will continue to grow at an average annual rate of about 40% in the future, becoming the first growth curve for the lithium ion battery market, according to the 2021, the installed capacity is expected to reach 1350GWh by 2025. Energy Storage Market: the Global Energy Revolution is in the ascendant, and the electrochemical energy storage market has entered the high growth channel. We expect the installed capacity to reach 200GWh by 2025, which will become the second growth curve of the lithium battery market. 3C CONSUMER MARKET: 3C consumer market demand is expected to rebound rapidly under new trends such as 5G, wearable devices, VR/AR and so on. We expect an average annual growth rate of 7% over the next year. Light, electric tools market: electric two-wheeled vehicles, electric tools market as the third growth curve of lithium batteries, but overall, the volume is still small. China is the world’s largest producer of lithium copper Chinese mainland, with 76% of the world’s production capacity, making it the world’s largest producer of lithium copper foil. In terms of production capacity, by the end of 2020, the Chinese mainland, Korea, Japan and Hongkong/taiwan of China accounted for 76% , 12% , 8% and 4% respectively of the production capacity of lithium copper foil. Chinese mainland and Korea are the main production areas of lithium copper foil. The global production capacity of lithium copper foil is mainly concentrated in Asia.

Global and China Lithium Copper Foil production rapid growth, China’s share continued to increase. From the global perspective, by the Global Lithium Battery Market, the rapid growth of scale, lithium battery copper foil demand also maintained a steady growth trend. Global production of copper foil for Lithium batteries reached 170,000 tons in 2019, up 16.4 percent year-on-year, and is expected to reach 183,000 tons in 2020, up 7.6 percent year-on-year, according to GGII data. In addition, global production of copper foil for Lithium batteries is expected to reach 704,000 tons by 2025, with CAGR of 30.9 per cent in five years. From China’s point of view, the production of copper foil for lithium-ion batteries rose from 42,200 tons to 153,400 tons in 2015-2020, maintaining a high speed and increasing, and China’s production of copper foil for lithium-ion batteries continues to increase globally, with the proportion expected to be 83.8 percent in 2020. Domestic Lithium copper foil Capacity utilization is not high, there is still room for improvement. With the support of the state for the new energy automobile industry and the rapid development of the new energy automobile market, copper foil for lithium batteries, as one of the core components of the power lithium batteries, also continues to attract new entrants, entrants compete through direct investment, industrial restructuring or mergers and acquisitions, while existing lithium battery copper foil companies are expanding capacity, resulting in the current market Capacity utilization. Between 2015 and 2020, the Capacity utilization of lithium-ion copper foil fluctuates between 63% and 74% , and it is expected that the demand for copper foil will increase as the penetration rate of new energy vehicles increases, Capacity utilization said.

(3) market pattern: The pattern is scattered, the market pattern of copper foil for lithium battery is scattered, and the industry concentration is obviously lower than that of other lithium battery materials. In 2020, Longdian Huaxin ranked first with more than 23,000 tons shipped, with a market share of 16.0 percent, followed by Nordisk and Jiayuan, with 19,000 tons shipped and 14,700 tons shipped, with market shares of 13.0 percent and 10.1 percent, respectively. In 2020, CR3 and CR5 of lithium copper foil were 39.1% and 51.7% respectively, while CR5 of Cathode, cathode, electrolyte and separator were all above 75% and 85% respectively.

(4) capacity sorting: The head of enterprises to speed up the expansion of production capacity, extremely thin copper foil production capacity is still scarce domestic enterprises have accelerated capacity expansion. At present, China accounts for nearly 80% of the world’s production capacity for lithium-ion battery copper foil. The pace of expansion of domestic production capacity, such as Nordisk, Jiayuan technology, Lingbao City Huaxin and Telford technology, has been greatly accelerated. However, due to the existence of capital, certification, technology and other barriers, capacity expansion is limited in the short term. Thin copper foil capacity is still scarce. With the rapid development of thin copper foil for lithium batteries, 6μm copper foil has gradually become the main type, and 4.5 μm copper foil has gradually increased. In 2020, the output of 6μm lithium copper foil was 52404 tons, accounting for 34.2% of the total output. 4.5 μm copper foil production 4745 tons, accounting for 3.1% of the total output, but the current 6 μm and below lithium copper foil main suppliers are, Nord, Jiayuan technology and Lingbao Huaxin. Global Lithium copper foil production capacity: by combing the production capacity of major domestic lithium copper foil manufacturers, we assume that the head of the enterprise capacity, expansion than other enterprises, therefore, the domestic market share will continue to increase, on the other hand, the overall domestic production expansion, the speed and pace will be significantly faster than foreign, so we expect the total copper foil production capacity in 2021-20232023 will reach 484.6485 tons. PERMEABILITY: The development trend of ultra-thin power lithium copper foil will accelerate the industrialization and application of 6μm lithium copper foil. We expect that the permeability of 6μm and below in the 2023 market will be nearly 60% . The unit consumption of lithium copper foil is assumed to be 825/622/480 t/GWh for 8/6/4.5 μm lithium copper foil. Therefore, according to the following calculations, we expect the global supply and demand of lithium 2021 copper foil to enter a tight balance, in the short term, with a relatively rigid supply side will not be able to meet the rapid rise in demand for power batteries caused by the gap. 

Source: Huachuang Securities, author: Peng Guangchun