Summary of Lithium Battery Copper Foil Industry Conference Call Industry Overview - The lithium battery copper foil industry is experiencing tight supply and demand due to increased requirements from both energy storage and power batteries, leading to a significant rise in capacity utilization rates, with many companies operating at near full capacity. It is expected that the operating rate will exceed 90% in Q4 2025 [1][2][10]. Key Points - **Demand Shift**: The energy storage sector is rapidly shifting towards thinner 4.5-micron copper foil to enhance energy density, despite a 10%-15% increase in procurement costs. This shift results in a 20% increase in total square footage, making it economically beneficial overall [1][6]. - **Production Challenges**: Initial production of 4.5-micron copper foil faced technical challenges such as roll length, pinholes, and breakage. However, these issues have been largely resolved through technological upgrades, allowing leading manufacturers to supply high-quality products consistently [1][4][5]. - **Cost Dynamics**: Overall copper foil costs are declining, with increased selling prices and output volumes. The market has largely moved away from producing 6-micron or 8-micron copper foil, focusing instead on 5-micron and 4.5-micron products [1][7][10]. - **Market Penetration**: The market penetration rate for 4.5-micron copper foil has reached 40%-50%, with most manufacturers discontinuing 8-micron and 6-micron products [1][8]. - **Profitability**: The profitability of 4.5-micron copper foil is significant, with production costs ranging from 23,000 to 26,000 yuan per ton, while 6-micron foil is barely breaking even [11][12][14]. - **Future Trends**: The market is expected to remain tight through 2026, with ongoing price increases for 4.5-micron and thinner copper foils. The industry is also encouraged to raise prices to prevent low-quality competition [3][10][17]. Additional Insights - **Production Capacity**: Current production capacity is being maximized, with orders extending into August of the following year. The overall market production has increased by approximately 20% [16][20]. - **Price Increase Trends**: There is a clear trend of price increases across the industry, with associations encouraging price hikes to maintain reasonable profit margins [17]. - **Shared Production Lines**: The production lines for energy storage and power battery copper foils are shared, which will influence future production schedules based on demand fluctuations [18]. - **Customer Lock-in**: Downstream customers are seeking to lock in production capacity to ensure stable supply, which poses challenges for suppliers in maintaining flexibility [19]. Conclusion The lithium battery copper foil industry is poised for growth driven by technological advancements and increasing demand for thinner products. The focus on 4.5-micron copper foil is reshaping the market dynamics, with significant implications for pricing, production capacity, and profitability.

Core Viewpoint - The lithium battery copper foil industry is experiencing a rebirth driven by cost reduction and technological innovation after a challenging period of losses over the past two years [3][4]. Industry Overview - From 2014 to 2023, lithium battery copper foil sales surged from less than 50,000 tons to nearly 500,000 tons, with total industry capacity increasing by over 120% from 2022 to 2023 due to a production expansion initiated in 2020 [3][5]. - In 2023, China's lithium battery copper foil production capacity reached 950,000 tons, with a total electrolytic copper foil capacity of 1,563,000 tons per year [5]. Financial Performance - Major listed companies in the copper foil sector faced significant losses in 2024, with losses ranging from 84 million yuan to 352 million yuan [4][6]. - The overall product gross margin for the lithium battery copper foil sector plummeted from 20% in previous years to 4.84% in 2023, and further down to 0.14% in 2024 [6]. Recovery Signs - In Q1 2025, six out of the top ten listed companies in the copper foil sector reported positive net profit growth, indicating a potential turning point for the industry [7]. - Factors contributing to the recovery include cost reduction through optimized processes and an increase in the proportion of high-value-added products [4][7]. Market Dynamics - The market is transitioning towards thinner copper foils, with 6-micron copper foil currently being the mainstream product, while demand for even thinner products like 4.5-micron and 3-micron foils is increasing [4][11]. - The processing fee for lithium battery copper foil peaked in April 2022 but has since declined significantly, with expectations of stabilization in the near future [5][10]. Future Outlook - The industry anticipates a gradual improvement in supply-demand dynamics as low-end capacity is phased out and market consolidation occurs [6][10]. - The market for ultra-thin copper foils (less than 6 microns) is expected to grow, with projections indicating that their market share could rise from 15% to 30-40% by the end of 2025 [11][12].