GGII: China's lithium battery separator industry experiences rapid shipment growth; supply and demand tightness will continue until 2027

Crypto Finance APP has learned that GGII data shows that the shipment volume of China’s lithium battery separator industry will grow rapidly in 2025, reaching a total annual shipment of 32.3 billion square meters, a year-on-year increase of 45.4%. The supply and demand side of the separator industry has shifted from a loose balance to a tight one, with leading companies operating at full capacity and full sales, driving the utilization rate of capacity to soar. However, under the constraints of expansion cycles, a supply-demand gap is emerging by 2027. Prices remain low, with only a slight rebound in wet process separators in the second half of the year, and a full upward cycle has not yet begun.

2021-2026 China Separator Shipment Volume (Billion Square Meters)

Data source: GGII Lithium Battery Research Institute, January 2026

Structural Differentiation: Dry Process Share Falls Below 18%, Wet Process Becomes Absolute Dominant

In 2025, the restructuring of the separator industry accelerated, with the dry process separator share continuing to shrink. In 2024, dry process separators accounted for 22% (corresponding to 5.9 billion square meters), and in 2025, it declined by nearly 5 percentage points to below 18%. Wet process separators increased from 78% (17.2 billion square meters) to 82.6%, becoming the growth driver.

Key driving factors include: 1) The cost-performance advantage becomes more prominent. In the first half of the year, price wars for wet process separators narrowed the price difference between mainstream wet and dry base films to within 0.15 yuan per square meter, accelerating customer switching; in the second half, prices of wet process separators slightly rebounded with supply and demand improvements but still remain at historical lows. 2) Upgrading downstream demand, with energy storage applications where 314Ah lithium batteries account for over 70%, which require higher stability and consistency from separators, promoting increased application of wet process separators.

Supply and Demand Pattern: From Loose to Tight Balance, Leading Companies Operating at Full Capacity Drive Capacity Utilization Surge

In 2025, the capacity utilization rate of separators gradually increased. From September, leading wet process companies operated at full capacity and full sales, with some initiating outsourced processing. However, due to high industry concentration and few small and medium-sized enterprises, outsourcing demand shifted to second-tier wet process companies.

In Q4, lithium battery companies accelerated product validation for small and medium-sized wet process separators, with some temporarily switching to dry process separators. GGII data shows that in Q4 2025, the capacity utilization rate of wet process separators exceeded 80%, approaching the high point of 2022, and the industry fully entered a tight balance.

According to GGII research, current separator companies are cautious about expanding capacity, mainly due to expectations that solid-state batteries will replace traditional separators, viewing separators as a “sunset industry” to some extent. Additionally, separators are heavy asset investments with long return cycles, and companies are firmly committed to raising prices to recover equipment investments.

On the equipment side, leading separator companies mainly use imported production lines from Toshiba, Brookner, and others. Some domestic suppliers like Zhuoqin and Zhongke Hualian have their own equipment suppliers, but key components still need to be imported for assembly. Currently, it is impossible to achieve 100% domestic production, and overseas equipment orders typically take about a year from order to delivery, lengthening the expansion cycle.

With increasing demand but limited large-scale capacity expansion, the separator industry is expected to remain tight in supply in 2026-2027.

Technological Iteration: Focus on High-End Demand, Multi-Dimensional Performance Upgrades Accelerate

In 2025, separator technology iterations focused on downstream demand, with multi-dimensional breakthroughs:

1. The application proportion of 5μm high puncture strength wet process separators is increasing month by month, with over 30% application in leading battery companies in Q4, and validation accelerating among second-tier companies.

2. The push for 500/600Ah+ energy storage cells raises requirements for separator flatness.

3. Under the trend of fast charging, the porosity of separators for power batteries increased from less than 50% to 50-55%, improving lithium-ion conductivity. Additionally, new silicon-carbon anodes drive demand for high-thermal-shrinkage separators, with significant differences in requirements for different cathode and anode materials.

Impact of Different Cathode and Anode Materials on Separator Thermal Shrinkage Performance

Data source: GGII Lithium Battery Research Institute, January 2026

Outlook for 2026: The Separator Industry Continues to Remain Highly Prosperous, Four Major Trends Are Evident:

1. Capacity utilization continues to rise, increasing by 7-10 percentage points throughout the year. In H2, wet process capacity utilization peaks at over 85% (85-90% is considered full capacity). Wet process supply remains tight, prompting battery companies to accelerate procurement of dry process separators.

2. Prices bottom out and rebound. Currently, separator prices are still low. In 2026, with the continuation of the tight balance, dry and wet process separators will gradually move away from lows, with mainstream wet process prices expected to increase by 10-20% year-on-year, restoring profitability.

3. The penetration of high-end products accelerates. Leading companies’ application share of 5μm high puncture wet process separators will surpass 50%. High-flatness energy storage separators and high-porosity fast-charging products will accelerate their adoption.

4. The demand for high-thermal-shrinkage separators rises. With the large-scale application of silicon-carbon anodes, the proportion of separators with 180°C thermal shrinkage is expected to exceed 0.5%, becoming a focus of technological competition.