The Zhitong Finance App learned that Huatai Securities released a research report saying that with the recent sharp rise in copper prices, the market's attention to composite foil has once again increased. In the medium to long term, composite copper foil is an important way to reduce the cost of traditional copper foil against the backdrop of rising copper prices, the trend remains unchanged. Reducing the cost of composite copper is the winner of industrialization. Composite aluminum foil is one of the key channels for improving battery safety. We continue to be optimistic about the alternative trend of composite foil to traditional foil. It is recommended to continue to track downstream testing and mass production, and be optimistic about foil companies that cooperate closely with downstream battery companies and are expected to receive priority orders.

The main views of Huatai Securities are as follows:

How do you view the relationship between copper price and composite copper foil

Recently, copper prices have risen sharply due to tight copper concentrate production and expectations that smelters will cut production. For batteries, direct materials, mainly copper, account for more than 80% of the cost of traditional copper foil. Theoretically, rising copper prices will affect the cost and price of copper foil, thereby affecting battery costs. Huatai Securities believes that in the short term, since traditional copper foil is still in the overcapacity stage, the impact of rising copper prices on the profitability of traditional copper foil companies is limited. In the medium to long term, in the context of rising copper prices, composite copper foil is an important direction for reducing the cost of copper foil. Huatai Securities estimates that the mass production rate of composite copper foil is 85%. The price of copper is above 46,000 yuan/ton, and its cost may be lower than traditional copper foil.

How do you view the market space of composite foils

In terms of composite aluminum foil, the application scale of composite aluminum foil is expected to reach 3-5 GWh in 24 years, mainly for medium- and high-priced passenger car applications by leading battery companies at home and abroad. Moreover, it will stay in the industry for a long time. In terms of composite copper foil, Huatai Securities predicts that it is expected to be mass-produced and applied at the battery level by the end of 24. Continued rise in copper prices is expected to affect the progress of industrialization. Its industrialization requires dynamic observation, and it is expected to reach mass production applications of 10 GWh or more in 25 years. Huatai Securities estimates that in 2027, the market space for composite copper foil will be 47.4 billion, 556% CAGR in 24-27; the market space for composite aluminum foil will be 201 billion, and the CAGR 267% in 24-27.

Industry progress update: Composite aluminum foil starts, composite copper foil is expected to be mass-produced in the second half of the year

1) Composite aluminum foil: Under the demand for high-safety alternatives, downstream applications of composite aluminum foil have already begun. Huatai Securities expects to start downstream this year, and more companies will achieve breakthroughs in mass production and application. 2) Composite copper foil: The noise in the market has faded away, and various companies are steadily advancing testing and application implementation. Huatai Securities believes that this year it is expected to see a more clear material process route, and the material level is expected to be mass-produced in the second half of the year.

Risk warning: NEV sales fall short of expectations, industrial chain profits fall short of expectations; composite foil industrialization progress falls short of expectations; technological route innovation.