According to data from GGII, China's lithium battery separator industry experienced rapid growth in shipments for 2025, with total annual shipments reaching 32.3 billion square meters, a year-on-year increase of 45.4%. The supply-demand dynamic shifted from loose to a tight balance, as leading manufacturers operated at full capacity and sales drove a sharp rise in capacity utilization; however, constrained by the expansion cycle, a potential supply-demand gap is emerging for 2027. Prices remained low, with only wet-process separators seeing a slight rebound in the second half of the year, indicating that a full-scale price increase cycle has not yet begun.

Structural differentiation accelerated in the separator industry in 2025, with the market share of dry-process separators continuing to shrink. The share of dry-process separators was 22% in 2024 (corresponding to shipments of 5.9 billion square meters), but fell by nearly 5 percentage points year-on-year in 2025 to below 18%. Conversely, the share of wet-process separators rose from 78% (17.2 billion square meters) to 82.6%, becoming the core driver of growth. The key factors driving this shift are: 1) The cost-performance advantage became more pronounced; a price war in the first half narrowed the price gap between mainstream wet-process and dry-process base films to within 0.15 yuan per square meter, accelerating customer switching. Although wet-process prices saw a slight rebound in the second half due to improving supply and demand, they remained at historically low levels. 2) Downstream demand upgraded, with 314Ah lithium batteries accounting for over 70% of the energy storage sector, which demands higher stability and consistency from separators, thereby boosting the application share of wet-process separators.

The capacity utilization rate in the separator industry gradually climbed throughout 2025. Starting in September, leading wet-process manufacturers were operating at full production and sales, with some initiating outsourced processing. However, due to high industry concentration and a scarcity of small and medium-sized enterprises, outsourced demand shifted to second-tier wet-process manufacturers. In the fourth quarter, lithium battery companies accelerated product validation with small and medium-sized wet-process manufacturers, and some temporarily switched to dry-process separators. GGII data shows that in Q4 2025, the capacity utilization rate for wet-process separators exceeded 80%, approaching the peak levels of 2022, indicating the industry had fully entered a state of tight balance.

GGII's research indicates that current separator manufacturers are adopting a cautious stance towards capacity expansion. This is primarily due to the anticipation of substitution by solid-state batteries, which has led to separators being somewhat viewed as a "sunset industry." Additionally, separator production involves heavy asset investment with long investment return cycles, making manufacturers resolute in their stance to collectively raise prices to recoup equipment investments. On the equipment side, leading separator manufacturers primarily use imported production lines from suppliers like Toshiba and Brückner. While some domestic suppliers, such as Zhuolian and Zhongke Hualian, have their own equipment providers, key components still require import and assembly, preventing 100% domestic production currently. The lead time from order placement to delivery for overseas equipment is typically around one year, thereby prolonging the expansion cycle. With demand increasing and large-scale capacity expansion failing to materialize, the separator industry is expected to remain in a state of tight supply from 2026 to 2027.

Looking ahead to 2026, the separator industry is expected to maintain its high growth trajectory, characterized by four key trends: 1) Capacity utilization rates will continue to climb, increasing by 7-10 percentage points for the full year. The peak utilization rate for wet-process separators in the second half is projected to exceed 85% (85-90% is considered full production), intensifying the supply shortage for wet-process types and prompting battery manufacturers to accelerate purchases of dry-process separators. 2) Prices will bottom out and begin to recover. While current separator prices remain low, the continuation of the tight balance into 2026 is expected to gradually lift both dry and wet-process prices from their lows. Mainstream wet-process separator prices are forecast to rise by 10-20% year-on-year, leading to a recovery in profitability. 3) The penetration of high-end products will accelerate. The application share of 5μm high-puncture wet-process separators from leading manufacturers is expected to surpass 50%, while products featuring high flatness for energy storage and high porosity for fast charging will see accelerated adoption. 4) Demand for separators with high thermal shrinkage performance will emerge. With the scaled application of silicon-carbon anodes, the share of separators with a heat shrinkage rate at 180°C is expected to exceed 0.5%, becoming a focal point of technological competition.