We will systematically answer the main questions we encounter in the following three aspects. The answer to the question is why I am so, and I am still so optimistic about the “copper foil industry chain.” Unfortunately, the more downstream, the greater the industry span, the involvement of CCL has slightly exceeded the ability of non-colored researchers, so I hope this report provides you with an open topic and research ideas:
1. What happened to the copper foil industry chain?
The overall supply of copper foil industry chain is in short supply. In essence, this is the inevitable result of the long tail effect of demand under the impact of the rapid development of the new energy automobile industry. In order to meet the emerging and increasing demand for lithium copper foil, the copper foil supply structure has been re-segmented and eventually led to “lithium battery”. Both copper foil and standard copper foil are insufficiently supplied. There is no copper foil raw material for sufficient production, which is the source of the overall supply of copper foil industry chain.
2.How long can the copper foil supply be insufficient?
1) At the supply end, domestic and foreign copper foil factories are already full of production, subject to the problems of “equipment, infrastructure, environmental protection, and capital”. The earliest batch of large-scale new capacity production will also be available after 2018. 2) The demand side is more than expected, and cloud computing, the Internet of Things, and automotive electronics will all drive the growth of terminal demand. This is very important. On the one hand, the demand will increase the supply gap, and more importantly, it will be more conducive to the price increase in the industry chain. The conclusion is simple. The shortage of supply will last for 2-3 years, and the overall supply gap of copper foil will reach 17%.
3. Why will CCL also fully benefit from this trend?
The nearly monopolistic competitive landscape of CCL has a unique pricing and cost transmission mechanism. This round will be more beneficial – the cost pressure caused by the rise in copper foil processing fees is much smaller than the rise in copper prices, and the increase in selling price will bring about a rapid expansion of profits. More importantly, the core of this round of rising is the insufficient production of effective CCL caused by insufficient copper foil. The imbalance between supply and demand is the root cause. It is different from history and cannot be simply understood as cost-driven.
4. How is the profitability and performance elasticity measured?
We have detailed the profit composition of copper foil and copper clad laminates, and have given flexible measurement tables according to downstream bearing capacity and historical experience. A geometric growth in profits may not be new, as we have experienced a series of surges in rare earths, lithium carbonate and lithium hexafluorophosphate since 2009.
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Link to this article：Why is Domestic "Copper Foil" Always in Short Supply?
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