China's copper foil prices expected to weaken after Spring Festival

Most copper foil processing enterprises in China will start and end their holiday on January 20-21 and January 28 respectively, but they will keep production with maintenance during the Spring Festival holiday although with no delivery on high cost and logistics obstruction, according to Mysteel's survey. While traders generally started their holiday a week or two weeks earlier from January 14 or even January 8.

Meanwhile, according to Mysteel's tracking, downstream enterprises did not reserve raw materials before the Spring Festival as actively as expected. Electronic industry enterprises had taken holidays in advance even before January 1 since they had completed orders in December 2022. Besides, battery enterprises also took holidays earlier than in previous years with weaker-than-expected demand since new energy vehicle markets performed variously and complicatedly with the expiration of China's subsidy policy and the rise of raw materials prices. In addition, copper prices increased sharply last week. So, most downstream enterprises completed reserves in advance or even reduced pre-holiday purchases of copper foils this year.

                    Data Source: Mysteel

However, the newly increased copper foil capacity in China will release continuously after the Spring Festival. Meanwhile, the competition will become fiercer with increases in market participants, copper foil capacity, and copper foil production regions, especially in the lithium copper foil market. Besides, composite copper foil enterprises accelerate development to enter the market, which also impacts the traditional copper foil industry. Last but not least, spot inventory is also a factor that will affect the development of copper foil enterprises.

While the demand from NEVs and electronics industries will not recover in the short term due to the competition in the whole industry chain and sluggish consumption.

So, Mysteel expects that copper foil prices will be weak after the Spring Festival in the case of increased supply and no obvious recovery in demand.

Written by Edenlis Huang, huangting@mysteel.com

Edited by Paula Xu, xuzhongping@mysteel.com