China's copper foil market has remained in a tight supply-demand balance since the third quarter, with both lithium-ion battery copper foil and electronic-circuit copper foil seeing simultaneous increases in output, orders and processing fees. The latest round of processing-fee increases reflects the combined impact of slower supply growth, stronger downstream demand and rising copper prices. However, the drivers differ across product segments. For lithium-ion battery copper foil, slowing capacity expansion and an approaching seasonal demand peak are providing the main support. For electronic-circuit copper foil, supply constraints are more pronounced, particularly for high-end products, while AI-related demand is creating a structural supply-demand gap. Meanwhile, elevated copper prices are adding further upward pressure on processing fees by raising manufacturers' financing and operating costs.
Source: Mysteel
Slower capacity growth supports lithium-ion copper foil processing fee increase
A slowdown in supply growth has become an important factor supporting the steady increase in lithium-ion battery copper foil processing fees. In previous years, the third quarter was typically a key period for lithium-ion copper foil capacity ramp-ups, and the release of new capacity would cap processing fees during this period. In 2026, however, only a small number of producers are still expanding capacity, while just two or three new projects are expected to come online. With producers' willingness to expand capacity continuing to weaken, copper foil manufacturers are increasingly focusing on raising capacity utilization rather than pursuing aggressive capacity additions.
As a result, operating rates across the lithium-ion copper foil sector are currently high, with leading producers running close to full capacity. Based on Mysteel's survey, no large-scale wave of new lithium-ion copper foil capacity is expected to come online in the near term. With new effective supply therefore limited, the supply side should provide a relatively firm floor for processing fees and leave room for further increases.
Demand for lithium-ion copper foils is also entering a stronger period. On one hand, Chinese new-energy vehicle manufacturers are approaching the traditional year-end sales push, while battery producers continue to raise production schedules. Leading battery makers are maintaining high operating rates, which is expected to bring forward raw-material procurement through the supply chain. On the other hand, demand from the energy-storage sector remains strong, supporting continued growth in demand for ultra-thin 4.5μm and 5μm copper foil. Overseas new-energy orders have also recovered this year, boosting China's copper foil exports. China's copper foil exports increased 71.79% year on year in H1 2026, further strengthening demand. Overall, while lithium-ion copper foil demand remains the primary driver of consumption growth, the key change this year is that supply is no longer expanding fast enough to absorb demand growth. This shift in the supply-demand balance is providing a stronger foundation for processing-fee increases than in previous years.
Source: Mysteel
Structural shortage and robust demand for electronic-circuit copper foil to drive sharp processing fee increases
The supply of electronic-circuit copper foil is tighter, with differentiation across product varieties. Chinese producers have accelerated the conversion of some mid- and low-end capacity toward higher-end products such as HVLP copper foil. However, effective high-end capacity remains limited, meaning that the transition has not translated into a meaningful increase in immediately available supply. The overseas supply side is also tightening. Japanese producers have been shutting down HTE capacity while shifting toward HVLP copper foil, further reducing the availability of conventional HTE products. Meanwhile, high-end copper foil capacity is increasingly being locked in by leading processors, leaving the spot market relatively short of supply. With downstream customers expected to increase procurement amid the September peak season, the tight supply situation is likely to become even more pronounced.
Capacity constraints are the primary driver of further HTE copper foil processing-fee increases, while sustained demand growth provides the fundamental support for higher fees for high-end products. The rapid expansion of AI-related applications is generating strong demand for high-performance, high-end copper foil, while the pace of relevant capacity additions remains comparatively slow. This is creating a structural supply-demand gap that is unlikely to be resolved quickly. Meanwhile, accelerating localization of raw materials and components is further increasing demand for domestically produced high-end copper foil. Consequently, copper foil manufacturers are showing clear willingness to hold firm on prices with sufficient orders at hand, while downstream acceptance of higher fees is generally stronger than in the lithium-ion battery sector.
Rising copper prices add further upward pressure
While copper prices are not the fundamental cause of the current tightening in copper foil supply, their rise has strengthened producers' incentive to raise processing fees. First, copper foil manufacturers generally operate under relatively long payment terms with downstream customers. As copper prices rise, the working-capital requirements of copper foil producers increase, while financing costs associated with extending credit to customers also rise. Producers therefore have a stronger incentive to pass part of these additional costs through to processing fees. Second, strong copper prices have encouraged some downstream buyers to bring forward procurement and increase raw-material stocking. This effect has been particularly visible in the electronic-circuit copper foil market, where downstream customers are relatively less price-sensitive than lithium-ion battery manufacturers.
Outlook
Overall, China's copper foil market is expected to remain relatively tight moving forward, while demand will continue to grow steadily. Consequently, copper foil processing fees are likely to continue growing, although the pace of increases will vary across product segments.
For lithium-ion battery copper foil, further fee increases are likely to be concentrated in ultra-thin products. In particular, 4.5μm and 5μm copper foil could see a further increase of around Yuan 1,000-2,000/tonne as demand for thinner products continues to strengthen. Meanwhile, given that processing fees have been rising, downstream battery manufacturers have limited tolerance for further sharp increases. As a result, fees for other lithium-ion copper foil are expected to remain broadly stable in the near term, with only modest upside.
The outlook for high-end electronic-circuit copper foil is more bullish. The supply deficit for high-end products is unlikely to be resolved in the short term, meaning that the current high-processing-fee environment is likely to persist. Tightness in high-end products is also gradually spilling over into the mid- and low-end segments, providing broader support for processing fees. Overall, processing fees for electronic-circuit copper foil could increase by a further Yuan 1,000-3,000/tonne.
The copper foil industry is likely to remain in a tight supply-demand balance for an extended period, with supply tightness likely to persist through H1 2027, as limited new capacity and high utilization rates constrain effective supply while demand continues to expand. This suggests that processing fees are likely to remain elevated and fluctuate at high levels for a prolonged period, and a gradual shift in pricing power toward copper foil producers may start, as supply growth becomes more disciplined and demand increasingly favors higher-value products.
Written by Mingyuan Wang, wangmingyuan@mysteel.com
