"Rising Tide" Is Still Going! May Sees Continued Growth of the CCL

"Rising Tide" Is Still Going! May Sees Continued Growth of the Copper-Clad Laminates

The market for copper-clad laminates (CCL) raw materials has heated up in tandem with May's slow rise in temperature. The industry is paying close attention to the three primary ingredients' rising prices: resin, glass fiber cloth, and electrolytic copper foil.

From 68,000 yuan in March to over 80,000 yuan on May 1st, the price of copper in Renminbi broke the 18-year high price history of copper foil and set new highs one after the other. The rising cost of copper has also led to a rise in the processing fees for electrolytic copper foil. Three main variables are responsible for the sharp short-term rise in copper prices:

First, scarcity of supply. There is a scarcity of copper coming from overseas mines, and market worries about shortages have been made worse by reports of production cuts at home smelters. In the near run, this has given copper prices a lot of support.

Second, the recovery of the economy. Since the middle of the previous year, the US manufacturing PMI has increased, and the ISM manufacturing index increased beyond 50 in March, suggesting that the US economic recovery may surpass market predictions. The demand for industrial metals like copper has increased as a result of the current trend of global economic recovery.

Thirdly, the expectations of policy. The possibility of a reduction in interest rates by the Federal Reserve has helped to sustain copper prices. Reduced interest rates typically increase demand for industrial metals like copper by boosting economic activity and consumption. Thus, one of the key reasons driving increased copper prices has also been policy changes.

In addition to the growing cost of copper, there has been sustained heat in the glass fiber fabric market. The prices of glass fiber products have increased significantly since March 25th, when glass fiber makers collectively renegotiated rates. Certain glass fiber variants have seen price rises of more than 20% in less than a month, and this increasing trend is still present. Conventional 7628 glass cloth used to cost 2.8 yuan a meter, but now it is 3.8 yuan per meter.

The need for inexpensive PCB inventory has grown as a result of the growing cost of glass cloth and copper foil, and the market environment has been reasonably active. Upstream industries in the supply chain have benefited greatly from rising factory utilization rates and rising raw material demand. The cost of phenol ketone, a raw material for resin, has been rising steadily in the meanwhile, and producers of epoxy resin have aggressively raised their prices, typically by 5% to 10%. The PCB industry chain's cost pressure has been made worse by this.

Overall, the price increases of electrolytic copper foil, glass fiber cloth, and resin have played a certain role in promoting the recovery of industry profitability and boosting confidence. With the gradual recovery of terminal demand, the profitability of the copper-clad laminate industry is expected to be further restored. However, this also brings new challenges and opportunities to the entire PCB industry chain.

China's economic recovery is still at a critical stage, and the basic trend of recovery and long-term growth remains unchanged. With the continued rise in raw material prices and the improvement of downstream demand, the resilience of the copper-clad laminate and PCB industries is expected to be fully unleashed. At the same time, enterprises also need to actively address the pressure brought by rising costs and intensified market competition, strengthen technological innovation and cost control, and improve product quality and service levels to cope with the challenges brought by market changes.