Dingsheng signs new contract with CATL to supply aluminium foils for electric vehicle batteries

On Wednesday, March 22, shares of Jiangsu Dingsheng New Materials Joint-Stock increased by as much as 4.6 per cent after the Chinese producer of aluminium materials announced that it and two of its subsidiaries had signed new contracts with Contemporary Amperex Technology (CATL). Under the agreement, Dingsheng will be taking care of the aluminium foil requirements of CATL.

The CATL facilities in China and Europe will get aluminium foil from Dingsheng and two of its subsidiaries, the Zhenjiang, eastern Jiangsu province-based company announced on Wednesday. Aluminium foil is utilized in new energy vehicle batteries. It also said that its European manufacturing facility, European Metals, would give a specific amount to CATL's factory on the continent between 2024 and 2026. It would meet at least half of the manufacturers' demands for aluminium foil in China between 2023 and 2025.

The purchase volume and pricing weren't stated; they would be decided by the two parties later, according to Dingsheng. It noted that the purchase won't significantly affect its performance this year. The two parties also want to work together in more international markets. As per the data, the South Korean battery juggernaut LG Energy Solution placed a sizable order with Dingsheng for aluminium foil for EV batteries. Over the next four years, Dingsheng will provide 61,000 tonnes of foil to LG Energy and its three China subsidiaries.

In recent years, Dingsheng has increased aluminium foil production for lithium batteries to keep up with rising demand. The product has a healthy profit margin of roughly 29 per cent, and the expanded capacity has improved the company's operation. According to its annual financial report, Dingsheng's sales of aluminium foil for EV batteries increased by more than twofold in 2021 over the previous year to 55,700 tonnes. As a result, revenue increased by over two and a half times to CNY1.8 billion (USD261.3 million), or almost 10 per cent of total sales.