Since last year, China's economy took the lead in resuming production from the epidemic, copper foil prices rose higher. In April 2020, the average prices of 6M and 8M copper foil were 91,500 Yuan/ton and 71,500 Yuan/ton, respectively, according to Xinfern data. The price of copper foil has been rising steadily since mid-early December 2020, and is now almost the same as the average price of copper foil in the early stage of the epidemic in February 2020. As of 2021, the price of 6M copper foil was 100,000 yuan per ton, up 9.24 percent from April 2020, and 8m copper foil was 84,000 yuan per ton, up 17.41 percent from April 2020. The author believes that the variety, sample, price lag and other reasons, Xin fern information prices slightly lower than the actual, the actual price increase higher.

1.More flowers on the demand side

Strong domestic demand for copper clad laminate, lithium battery installation continued to strengthen. According to the process flow, copper foil can be divided into electrolytic copper foil and calendered copper foil. Electrolytic copper foil is electrodeposited from copper sulfate solution under direct current. It is mainly used for lithium battery (lithium copper foil) and rigid copper clad plate (electronic copper foil, standard copper foil) , for flexible copper clad laminates. The main application fields of lithium copper foil are new energy automobile and consumer electronics (battery) , and the application fields of electronic copper foil are communication equipment and consumer electronic components (CCL) .

Electronic copper foil, domestic copper clad laminate demand. As copper foil downstream carrier, in recent months domestic copper clad laminate demand increased, bringing the rise in import unit price. In November 2020, China's import and export prices of copper clad laminate were 21.52 US dollars/kg, 5.73 US dollars/kg, import prices rose significantly.

Power Lithium battery installed capacity continued to strengthen. From July to September in 2020, the installed capacity of power lithium batteries in China was 9.6 Gwh, 10.6 Gwh and 13.9 Gwh, respectively

From the perspective of the main downstream industries, copper foil and its downstream CCL products belong to a typical pro-cyclical variety. First, the economic rebound brings about a pick-up in the demand for the main downstream electronic components and circuit boards; Second, the high-speed growth of domestic new energy vehicles, the copper foil for lithium battery can be pulled obviously.

Since the resumption of work last year, the new energy vehicle production recovery growth. From September to November in 2020, the output of new energy vehicles in China increased by 51.5% , 94.1% and 99% respectively. From January to November 2020, the output of new energy vehicles in China was 1.141 million, which was the first positive change from negative to positive in 2020, an increase of 7.6 percent. New Energy vehicle demand recovery, led lithium copper foil demand higher.

China sold 170,000 new energy passenger vehicles in November 2020, up 138.7 percent from a year earlier, according to the latest figures. Sales of plug-in hybrids were 26,000, up 98.1 percent year on year, while wholesale sales of pure electric vehicles were 144,000, up 148 percent year on year.

Policy driving to ensure the growth of new energy vehicle. In early December 2019, the Ministry of Industry and Information Technology publicly solicited opinions on the new energy vehicle industry development plan 2021-2035, which calls for new energy vehicles to account for about 20 percent of new vehicle sales by 2025(compared with 4.7 percent in 2019) . In 2019, China sold 25.769 million vehicles, of which 1.206 million were new energy vehicles, with a penetration rate of 4.7 percent. According to BMW Group forecasts, by 2025, the global new energy vehicle sales curve will show a clear upward trend, an average annual growth rate of more than 30% . From 2020 to 2025, the compound annual growth rate of new energy vehicle sales will be 30% , and the new energy vehicle sales will reach 5.821 million units in 2025.

In October 2020, the value of China's exports of electronic components increased by 15.98 percent year-on-year. The sales profit margin of China's electronic components manufacturing enterprises has risen sharply since the resumption of work and production. It was only 4.22% in March 2020 and increased by 8.54% in October 2020. In February 2020, affected by the epidemic, China's smartphone production dropped sharply, with a cumulative output of only 98.36 million units, down 32.5 percent year-on-year. Since the resumption of work and production, the epidemic has led to an increase in demand for smartphones for telecommuting, and smartphone production has gradually recovered, from January to November 2020,976 million units were produced, an increase of 3.8 percent year-on-year. As the next 5G base station is completed, it is expected to generate new demand for smartphones. From August to November 2020, the output of notebook computers increased by 27.1% , 24.2% , 50.2% and 47.8% year-on-year.

The 5g base station has entered the intensive operation period. In 2019, China completed the construction of 130,0005g base stations; from January to September 2020, China completed 480,0005G base stations. The author estimates that 700,000,900,000 and 1 million 5G base stations will be completed in 2020-2022.

The epidemic has accelerated the growth of the Internet data center (IDC) market. In 2010, China's IDC market size was only 10.2 billion yuan. In 2019, the market size reached 156.3 billion yuan, an annual compound increase of 35.4% . On April 20,2020, Alibaba Cloud announced an additional 200 billion yuan over the next three years for research and development of key technologies such as cloud operating systems, servers, chips, networks, and future oriented data centers Tencent to invest 500 billion yuan in new infrastructure over five years.

2. Controllable growth of supply

In 2010, China's electrolytic copper foil production capacity of 209,900 tons, output of 161,300 tons, 76.8% Capacity utilization; in 2019, China's electrolytic copper foil production capacity of 534,000 tons, output of 431,000 tons, 80.7% Capacity utilization. From 2010 to 2019, China's annual compound growth rate of production capacity was 10.9% , and the annual compound growth rate of output was 11.5% . Broken down, 292,000 tonnes of electronic copper foil and 139,000 tonnes of lithium battery copper foil were produced in 2019. In 2019, the share of domestic enterprises in copper foil production was only 56% , and the share of foreign investment was as high as 44% .

But according to the progress tracked in 2020, the actual expansion was lower than expected. According to my research, the main reason for the slow progress is the long order cycle of copper foil equipment, equipment manufacturers capacity constraints, etc. . It is expected that the supply and demand pattern of the 2021 industry will be better than expected.

Source: Non-ferrous Metal, Staff Editor: Yang Pian