The success of Korea Zinc, a latecomer in the domestic copper foil industry, in its first product supply to KZAM reflects the recently changed atmosphere in the battery market. As efforts to decouple from China in the battery supply chain spread, centered on North America, and with expanding demand for energy storage systems (ESS), domestic copper foil companies are seizing opportunities for recovery.
According to industry sources on the 13th, global battery makers have been increasingly inquiring about supplies from domestic copper foil companies. Driven by a recovery in product demand, key companies' second-quarter performance indicators improved across the board. SKC's copper foil investment subsidiary SK Nexilis recorded sales of 254 billion won in the second quarter, achieving its highest quarterly performance on record. Sales volumes for ESS and electric vehicle (EV) copper foil increased by 76% and 28%, respectively, compared to the previous quarter.
Lotte Energy Materials' average factory capacity utilization rate, which had remained in the high 40s percent range last year, jumped to 77% in the second quarter of this year. This was due to increased sales of battery foil for EVs and ESS, as well as a surge in demand for circuit foil used in artificial intelligence (AI) servers and network equipment. Solus Advanced Materials also saw its second-quarter battery foil sales rise by 63% to 75 billion won from 46 billion won in the same period last year. Shipments increased by 40% compared to the previous quarter, raising the capacity utilization rate of its Hungarian factory from 47% in the first quarter to 67% in the second quarter. Korea Zinc's KZAM, which had previously faced difficulties in securing customers, has recently begun supplying copper foil to global battery makers.
At the center of these changes is the movement to restructure the global battery supply chain. The United States has strengthened regulations that prevent companies from receiving advanced manufacturing production tax credits (AMPC) if they source more than 40% of battery costs from China or other Prohibited Foreign Entities (PFE). As a result, domestic copper foil companies have emerged as beneficiaries. In fact, aside from China, only domestic companies possess large-scale copper foil production capacity.
The rapid growth of the ESS market is also contributing to this trend. According to market research firm SNE Research, global lithium-ion battery ESS shipments in the first half of this year reached 461.3 gigawatt-hours (GWh), a 71% increase compared to 269.7 GWh in the same period last year. The three major domestic battery companies—LG Energy Solution, Samsung SDI, and SK On—achieved simultaneous profitability for the first time in seven years in the second quarter of this year, based on ESS orders.
In response to recovering demand, domestic copper foil companies have launched previously postponed investments and expanded production capacity. Lotte Energy Materials plans to early transition its Malaysian factory, a hub for battery foil production, to a 100% production and sales system. Following the startup of Factory No. 5 last month, the scheduled start-up time for Factory No. 6, originally planned for next year, has been advanced to the fourth quarter of this year. The company is also focusing on improving cost competitiveness. Korea Zinc's strength lies in its ability to secure key raw materials such as copper and sulfuric acid independently, thereby ensuring price competitiveness. SK Nexilis plans to increase the production share at its Malaysian factory to boost profitability.
Industry observers also expect further improvement in profitability due to rising copper foil prices in the second half of the year. This is because accumulated oversupply centered on Chinese companies may ease amid China's government-led industrial restructuring and U.S. tariff barriers. It has been reported that major Chinese copper foil companies have already begun raising prices since the second half of last year.
An industry official stated, "As domestic battery makers secure ESS volumes based on local production capacity in the United States, benefits are spreading to domestic copper foil companies as well." He added, "With demand growing rapidly centered on AI data centers, positive momentum is expected to continue through the second half of the year."
in INDUSTRY
