CMSC: Significant changes in supply and demand situation, prices of wet diaphragm entering an upward trend.

CMSC released a research report stating that according to industry feedback, mainstream companies producing wet process separators are already at full production capacity, and prices for wet process separators, coating film, and dry process separators are starting to rebound. Currently, the profitability of the separator industry is at a historical low, with the top two companies in the industry experiencing losses in the past two quarters. Despite the improving demand, mainstream companies have low willingness to expand production due to the heavy assets and long expansion cycles of separator production; the industry's capital expenditures have been gradually decreasing for 23 years, and limited capacity may lead to tighter supply by 2026. The main views of CMSC are as follows: Wet process separator prices entering an upward trend Currently, the top separator manufacturers have high production capacity utilization rates, with feedback from the industry indicating that the top 3 wet process separator companies are already at full capacity, and the leading dry process separator companies have a production capacity utilization rate of about 70-80%. Prices from third-party sources have already shown signs of bottoming out and reversing, with noticeable increases in prices of 7m and 9m wet process separators since August, and base film prices have increased by 7 cents per square meter; coating film prices have increased by 1 cent per square meter. Feedback on dry process separators also indicates recent price increases. Capital expenditure contraction, limited industry capacity release The industry's profitability is at a historical low, with Enjie and Xingyuan experiencing losses in 2025Q2-Q3. Additionally, major participants have high levels of interest-bearing debt and inadequate willingness and capabilities for expansion. Since 2023, the industry's capital expenditures have gradually decreased, with no public announcements of new plans to build lithium battery separator production capacity by listed companies in the industry since 2024. In August of this year, the industry "anti-internal competition" meeting reached a consensus against blind expansion of production, with a separator expansion cycle of 1.5-2 years, and limited expectations for subsequent effective supply release. Continued increase in industry concentration, focus on the application of 5m ultra-thin high-strength film As of the first half of 2025, the industry's CR4 exceeded 70%, continuing to increase from 24 years. Energy storage and fast charging for vehicles require higher thickness, safety, and performance from separators, with 5m ultra-thin high-strength wet process separators offering good performance and premium pricing, with market share expected to quickly rise in the future. Meanwhile, leading companies are developing new generation coating separators, investing in wide-width high-speed production lines to further enhance product performance and cost advantages, with a potential for continued increase in industry concentration. Risk warning Downstream demand falling short of expectations, and industry self-regulation agreements implemented falling short of expectations.