The hottest PCB industry has entered the era of hi

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The PCB industry has entered the era of high cost, and the advantages of leading enterprises have become prominent.

1. The price of raw materials has increased in succession, breaking the original pattern of the industry.

there are many kinds of raw materials required for PCB production, mainly copper clad laminate (CCL), semi cured sheet (PP), copper foil, copper ball, gold salt, ink, dry film and other materials. Generally speaking, in the cost composition of PCB, copper clad laminate accounts for about 37%, semi cured sheet 13%, gold salt 8%, copper foil copper ball 5%, and the proportion of labor cost is also relatively high, about 11%. The proportion of raw materials of different types of products has been slightly adjusted

copper clad laminate (CCL) is a kind of sheet-like bonding material that combines the upper and lower surfaces of semi cured sheet (PP) with copper foil to make substrates with different specifications and thicknesses under the condition of high temperature and high pressure, while the semi cured sheet is mainly synthesized by glass fiber cloth, resin and additives. According to the thickness of copper clad laminate, the cost composition of fiberglass cloth accounts for 25% - 40% of the cost, resin costs account for 25% - 30%, and copper foil accounts for 30% - 50%. As the copper clad laminate industry has high concentration, strong bargaining power, and the price transmission to the PCB industry is relatively smooth, on the whole, the cost of PCB enterprises is more sensitive to the price of upstream main raw materials, such as electrolytic copper foil, glass fiber cloth, synthetic resin, etc., and the price rise effect will bring great pressure on the profits of PCB enterprises

1.1. the price of copper foil fluctuates at a high level, and the relationship between supply and demand will be eased in the second half of the year.

this round of copper foil enterprises, affected by the rising demand for lithium battery copper foil from new energy vehicles, are actively converting to lithium battery copper foil, and the standard copper foil used to produce PCB board is reduced, resulting in a rapid rise in the price of copper foil since the beginning of 2016. There are differences in production equipment and process between standard copper foil and lithium copper foil. Lithium copper foil has fewer processing procedures, simple process treatment, and its gross profit is higher than that of standard copper foil for PCB. With the promotion of China's new energy vehicle incentive policy, the production of new energy vehicles has expanded, and the demand for copper foil used as the cathode carrier of lithium-ion batteries has also increased significantly. Domestic and foreign manufacturers have high enthusiasm to switch production. According to the estimation of copper clad laminate industry association, Taiwan, Japan and South Korea produced 62000 tons of lithium battery copper foil in 2015, accounting for 30.62% of the total output of electrolytic copper foil. In 2016, 16700 tons of lithium battery copper foil (including conversion) were added in China, reducing the proportion of standard copper foil in the total annual capacity of domestic electrolytic copper foil from 82.3% in 2015 to 79.8% in 2016

the price of copper foil is mainly composed of copper price and processing fee. From the perspective of the trend of international copper prices, copper prices have been rising since the beginning of 2016, and once hit a record high in the second half of 2017. Shandong Jinbao announced an increase of 1000 yuan per ton of copper prices on July 5, 2017; On July 11, 2017, willion electronics also announced an increase of 2000 yuan/ton for copper foil. In the same period, about 157000 tons of copper foil withdrew from the FR-4 supply chain, accounting for about 31% of the total standard copper foil, resulting in a serious contraction in the supply of copper foil for PCB production and a sharp rise in copper foil processing fees. Since the beginning of 2018, the copper price has slightly corrected at a high level, but the copper foil processing fee has not been adjusted

the newly increased capacity of copper foil will be released as soon as the second half of 2018, which will partially alleviate the supply and demand pressure of upstream and downstream. The difficulty of expanding the production of copper foil lies in the titanium cathode roller production equipment imported from Japan. Japanese manufacturers usually do not expand the production of cathode rollers because of the increased demand for copper foil. The tight supply of equipment has led to an increase in the production expansion cycle of copper foil from 1-1.5 years to 1.5-2 years. According to the statistics of the domestic copper clad laminate industry association, 69000 tons of new electrolytic copper foil capacity has been released in 17 years, of which 81.2% is the capacity of lithium battery copper foil; In 18 years, seven domestic copper foil enterprises added 68500 tons of capacity, of which 89.1% was lithium copper foil capacity. Therefore, by the end of 18, the lithium copper foil market is likely to be oversupplied

the price rise of copper foil is the main driving force of the price rise of copper clad laminate, which is indirectly transmitted to PCB enterprises through copper clad laminate. Through sensitivity analysis, every 10% price rise of copper foil will lead to an increase of PCB cost of 1.6% - 2.35%. Copper foil is a capital intensive industry, with large-scale production, relatively high market concentration and strong bargaining power for downstream. The rising price of copper foil will exert great pressure on downstream costs

1.2. the industry cycle superimposes the pressure of environmental protection, and the price of glass fiber cloth with two wheel drive increases

the capital intensive glass yarn industry has a highly concentrated market and strong bargaining power of manufacturers. Glass fiber yarn is calcined into liquid from silica sand and other raw materials in the kiln, and then pulled into very fine glass fiber through a very small alloy nozzle, and then hundreds of glass fibers are twisted into glass fiber yarn. The construction investment of kilns is huge. It is a capital intensive industry. The 30000 ton kilns need 400million yuan, and the new kilns need 18 months. The boom cycle is difficult to grasp. Once the ignition is started, the production must be carried out 24 hours a day, and after about five years, the production must be stopped for half a year for maintenance, and the cost of entry and exit is huge. The glass fiber cloth industry has a high degree of concentration, with 70% of the global production capacity concentrated in five enterprises: China Jushi, OCV, neg, Chongqing International and Taishan glass fiber. In China, China Jushi, Taishan fiberglass, Chongqing International, Shandong fiberglass, Sichuan Weibo and Changhai shares have concentrated 80% of the national production capacity

the price of electronic glass fiber cloth has increased nearly three times since the third quarter of 2016. Taking 7628 cloth for thick plate as an example, the average price in July 2016 was only 3.2 yuan/meter, rising to 8.7 yuan/meter in April 2017, approaching the historical high of 10 years, 10.6 yuan/meter. The following table shows the price increases announced by several major suppliers in 2017

the reasons for the rise in the price of glass fiber can be summarized as follows:

the supply side capacity contraction led by glass fiber manufacturers: the glass fiber industry is highly concentrated and has obvious periodicity. In the case of continuous downturn in the early market of glass fiber electronic yarn/electronic cloth, many enterprises with tank kilns give priority to the development of glass fiber roving products, and the number of new glass fiber electronic spinning tank kilns is reduced. Among domestic enterprises, only Taishan glass fiber newly built 50000 ton glass fiber spinning tank kilns, which were put into operation in November 2015. In 2016, it was unrealistic for Taishan glass fiber and Chongqing International Shanghai base to develop a large number of new varieties of resin. The yarn tank kilns were successively shut down, with a total reduction of 38000 tons of electronic glass fiber yarn. In addition, a glass fiber spinning tank kiln in Chongqing international headquarters base has been cold repaired and shut down, and the production capacity of electronic glass fiber yarn in the industry has fallen slightly. In the case of limited production capacity of electronic glass fiber yarn, supply and demand tend to be tight in the short term

the increasing pressure of environmental protection and the shrinking production of imitation cloth have changed the supply-demand relationship of electronic glass fiber gauze

under the guidance of the new industrial policy, the production capacity of electronic cloth tends to be concentrated in enterprises with very small kilns, which are impossible to do with the tonnage of glass fiber tank electro-hydraulic servo experimental machines, resulting in an increase in the storage pressure of professional electronic cloth manufacturers

18 since the beginning of the year, some fiberglass cloth prices have begun to loosen. We learned from the market that 7638 cloth and 2116 cloth for thick plate have a large decrease, with an average decrease of 5% ~ 18%; The price of glass fiber cloth for thin plates remains high. The tank kilns under cold repair in the early stage have been ignited successively in 18q2, and the production capacity has been gradually released. The factor that has a great impact on the supply side this year will be environmental protection and production restriction, and the medium and low-end non-conforming enterprises will be further cleared

1.3. the price of resin is still high

synthetic resin has become one of the important raw materials for copper clad laminates because of its good mechanical, electrical and bonding properties. Different kinds of PCBs have different requirements for resin: Generally speaking, phenolic resin and epoxy resin are mainly used for single/double-sided boards, multilayer boards and HDI, polytetrafluoroethylene is mainly used for high-speed/high-frequency board making, and Environmental Friendly Non brominated resin is used for halogen-free copper clad laminate popular in recent years. At present, suppliers in the mainland and Taiwan mainly provide phenolic resin and epoxy resin

in addition to the downstream demand, there are two other reasons for the rise in the price of epoxy resin: raw materials and environmental protection. In terms of raw materials, the upstream industries of epoxy resin (mainly oxychloropropane and bisphenol A) are closely related to the trend of global crude oil prices. This year, crude oil prices continue to rise, and resin prices continue to hit new highs. In terms of environmental protection, many manufacturers in Huangshan, Shandong and other places do not meet the environmental protection requirements, resulting in production reduction and shutdown, or increasing production costs to meet the environmental protection requirements, thus promoting the continuous rise in the price of epoxy resin

1.4. the price of upstream raw materials directly affects the price of copper clad laminate

copper clad laminate is the most basic material of PCB, also known as substrate. When it is used in the production of multilayer boards, it is also called core. It is mainly divided into rigid copper clad laminate (CCL) and flexible copper clad laminate (FCCL), which are subdivided into different material types according to the downstream demand for different properties. Judging from the current market demand for copper clad laminates, there will be four major trends in the future:

(1) it is sufficient to meet the environmental requirements of lead-free and halogen-free, and the speed regulation range of 1~500mm/min is sufficient

(2) light weight, high strength, thinner

(3) meet the requirements of high frequency and high speed in the future

(4) it can adapt to more complex working environment, such as high heat resistance, corrosion resistance, etc

at present, Japan, the United States and Europe have focused on small and sophisticated fields such as composites and special substrates

in 2016, the global rigid copper clad laminate market increased from US $9.37 billion in 2015 to US $10.12 billion in 2016, with an annual increase of 8.0%. Moreover, the copper clad laminate market is highly concentrated. Since 2013, the top ten PCB Companies in the world have accounted for more than 70% of the market share, reaching 74% in 2016. However, the increase of production capacity is too slow, and the compound growth rate from 2013 to 2016 is only 2.2%. The supply-demand relationship between copper clad laminate and PCB industry has been tense since the end of 16

the biggest rise in the price of copper clad laminate was from the end of 2016 to the third quarter of 2017, and the average price soared from 101 yuan/piece to 200 yuan/piece. Since the end of 2017, the price of copper clad laminate has loosened, and after a period of fluctuation, it basically fell back to 170 yuan/piece. In January, 2018, Jiantao took the lead in announcing the price increase notice. However, from the perspective of downstream procurement, the price increase did not last long and was not implemented in the downstream bulk purchase orders. From the end of March 2018, copper clad laminate manufacturers began to reduce prices, with an average price reduction of about 5%. However, since late May, downstream PCB orders have significantly recovered from the off-season. In June, the overall order scheduling was tight, and the large copper clad laminate manufacturers began to send a price rise signal again. We expect that the overall price rise of CCL this year will be limited, and some new capacity of CCL will be opened in the third quarter of 2018, which will further alleviate the supply-demand relationship with downstream PCB enterprises

chart: in 2017, the prices of large copper clad laminate manufacturers increased successively

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