Korean battery copper foil makers that had struggled amid the electric vehicle market slump have recently been raising their factory utilization rates one after another. That is because demand is growing in North America for non-Chinese energy storage system (ESS) copper foil, and Europe's electric vehicle market is also recovering. Copper foil is a thin copper film used to wrap anode materials, a secondary battery component.
According to the industry on the 25th, SK Nexilis, a copper foil manufacturing subsidiary of SKC, posted record quarterly sales in the second quarter of 254 billion won. Sales at Lotte Energy Materials were 194.2 billion won, up 21% from the previous quarter's 159.8 billion won. Sales in the battery foil institutional sector at Solus Advanced Materials were 75 billion won, up 22% in the same period.
The three copper foil makers saw sales rise because orders increased mainly from customers in North America and Europe. The U.S. government tightened rules so companies cannot receive the advanced manufacturing production credit (AMPC) if 40% or more of battery costs are sourced from prohibited foreign entities (PFE) such as China. Excluding China, Korean companies are the only ones with large-scale battery copper foil production capacity.
Factory utilization is also rising. According to each company's quarterly report, SK Nexilis' factory utilization jumped from 69.6% in the first quarter to 75.7% in the second quarter. In the same period, Lotte Energy Materials' factory utilization rose from 66.6% to 72.1%, and Solus Advanced Materials' Hungary plant utilization increased from 47% to 67%, respectively.
The three copper foil makers expect factory utilization to climb further in the second half. Increasing electric vehicle sales in Europe are expected to be a tailwind. In the first half, European EV sales (2.45 million units) rose 31% from a year earlier, and battery installations (131 GWh) increased 29%.
Orders for non-Chinese battery copper foil are also increasing. SK Nexilis said in its second-quarter conference call that it had secured enough demand for its Malaysia plant to run at full capacity in the second half. Lotte Energy Materials decided to move up the start of operations at its sixth Malaysia plant from next year to the fourth quarter of this year.
Solus Advanced Materials is set to complete its Canada battery foil plant within the year. When operations begin early next year, it will be the only one among domestic corporations to secure a production base in North America. Factory utilization in the second half is projected to be in the 80% range.
However, the industry says that while recent order growth is narrowing losses, a turnaround to operating profit is likely only next year. The reason is higher fixed costs from plant expansions. Although ESS battery copper foil shipments have increased, profitability is lower than for EV battery copper foil.
Lotte Energy Materials' operating loss in the second quarter was 16.9 billion won, with the deficit narrowing 45% from a year earlier. SKC's second-quarter operating loss was 14.4 billion won, down 79% year over year. Solus Advanced Materials' operating loss was 21.3 billion won, similar to the second quarter last year.
An industry official said, "Battery cell makers in North America and Europe are increasing orders for battery foil," and added, "In addition to ESS market growth, we expect profitability to improve in the second half as copper foil selling prices rise."