Jiangxi Copper (600362.SH), which missed the good time, chose to terminate the listing of its copper foil business. The planned copper foil project exceeding 10 billion yuan earlier may be "stalled".

Terminating the listing of its copper foil business.

Last night, Jiangxi Copper announced that it will terminate the listing of its fully-owned subsidiary Jiangxi Copper Foil Technology Co., Ltd. (hereinafter referred to as Jiang Copper Foil) on ChiNext and withdraw the relevant application documents.

Jiangxi Copper mentioned in the reason for the termination of the spin-off: "Based on current market environment and other factors considerations." In fact, the copper foil market has fallen into "Red Sea competition." The company stated in its 2023 annual report that the expansion rate of electrolytic copper foil is far greater than the demand growth rate. The industry has intensified competition, processing fees have significantly decreased, and the overall profit of the copper processing industry has declined. The industry has further subdivided and presented differences.

In addition, the domestically leading copper foil manufacturer, Tongguan Copper Foil (301217.SZ), stated in its performance briefing in May that the production capacity of the copper foil industry is expanding rapidly, competition is fierce, and the revenue of copper foil processing fees has decreased significantly. The net profit of the company in the first quarter of this year was a loss of RMB 28 million.

Yu Can, an analyst of the copper strip and foil department of Shanghai Ganglian E-Commerce Holdings, told Cailian Press that with the continuous release of planned production capacity, the competition in the copper foil industry will become more fierce. Since this year, the overall start-up rate of the copper foil industry has remained at around 60%. Affected by the increase in raw material prices, downstream stocking is booming, but the actual consumption has only slightly increased except for the lithium electric copper foil, and the demand for electronic circuit copper foil remains weak.

The announcement shows that Jiangxi Copper first proposed its plan to spin off and list the copper foil business on the board of growth in early 2022. According to Mysteel data, at that time, the processing fee of the mainstream 6-micron lithium electric copper foil was about RMB 45,000/ton. The current price of about RMB 16,000-18,000/ton has dropped by more than 60% compared to before.

Some investors said on the company's investor interaction platform, "Missed the good time, it is a pity."

The industry continues to be under pressure, and the 10 billion copper foil project may be "stalled."

In the plan for Jiangxi Copper to spin off and list Jiang Copper Foil, the company mentioned in its future development strategy that it should "expand capacity in an orderly manner and improve the production capacity of high-performance copper foil."

In fact, the company's plans for copper foil have not been met. The announcement shows that as of the end of 2023, the company's copper foil production capacity is still 30,000 tons built in 2020.

In July 2021, Jiangxi Copper had thrown out an investment plan of 10 billion yuan for copper foil. According to the previous announcement, the project of an annual output of 100,000 tons of lithium electric copper foil with an investment of RMB 11.4 billion will be undertaken by Jiangxi Copper Yeye Copper Foil Co., Ltd. (before the rename to Jiang Copper Foil).

Among them, the Phase I of the project is implemented in stages, with an annual output of 50,000 tons of lithium electric copper foil, striving to complete and put into operation 25,000 tons of lithium electric copper foil in the first phase before December 31, 2023, and all completed and put into operation before December 31, 2024; The Phase II of the project is an annual output of 50,000 tons of lithium electric copper foil and strives to complete all of them before December 31, 2028. After the two phases of the project are put into operation, the annual production capacity of 100,000 tons of lithium electric copper foil can be realized.

It is worth noting that the 2023 annual report of Jiangxi Copper no longer mentions the 100,000 tons/year lithium electric copper foil project.

Looking forward to the copper foil industry, Yu Can told the reporter that the entire industry will be in a state of continuous pressure, and it is expected that some companies will still try to obtain orders and dominate the market by playing the "price war" method as new production capacity is released and new players enter. Overall, after the profitability of the industry has declined significantly, many copper foil factories no longer compete with each other, and "it is better to produce less if less is profitable."

According to the data of the electronic copper foil materials branch of the China Nonferrous Metals Industry Association, among the copper foil projects under construction, the planned new capacity in 2024 is estimated to be about 646,000 tons. The total annual production capacity of electrolytic copper foil in China can reach 2.203 million tons. Although the data shows that the annual growth rate of new electrolytic copper foil production capacity in 2023 and 2024 is in double digits, the actual utilization rate of new production capacity will have a significant decline compared to 2021 and 2022. Due to the great uncertainty in current market demand, it is difficult to predict when the "turning point" in the utilization rate of new production capacity will rise again and is not optimistic in the short term.