The Zhitong Finance App learned that China Merchants Securities released a research report saying that since the beginning of the year, downstream demand has continued to pick up, PCB operating rates have generally improved, while upstream main material prices have continued to rise. Some manufacturers in the CCL industry have already raised prices for the first time in March-April. Recently, upstream copper prices have risen sharply, and copper foil processing fees are also on the rise. Electronic glass fiber cloth manufacturers have restoratively raised product prices, and midstream copper clad plate (CCL) manufacturers have also begun issuing downstream price increase notices to ease cost pressure. Currently, downstream demand is picking up and the upward trend in upstream commodity prices remains unchanged. PCB manufacturers increase raw material inventory preparations, all of which are expected to drive the CCL industry into an upward channel of price increases, and profit levels continue to recover.
The main views of China Merchants Securities are as follows:
CCL is the core PCB base material and one of the main cost components. The upstream PCB industry mainly consists of copper-clad sheets (CCL, accounting for about 30% of PCB cost), semi-cured sheets (PP), copper balls (9%), copper foil (6%), and special chemical materials (ink, photoresist, etching solution, etc.). Among them, CCL is a combination of copper foil and insulating medium. It is also an important electronic basic material and the core base material and cost of PCBs. The upstream mainly consists of three main materials - copper foil (accounting for about 42% of the cost), epoxy resin (about 26%), and glass fiber cloth (about 26%), and glass fiber cloth (about 26%) 19%)
The expected increase in upstream copper prices, copper foil processing fees, and electronic glass fiber cloth prices has gradually been realized. It is expected that the cost end of CCL will increase by about 8.5% in the short term. Copper prices have recently risen sharply, at 16.1% since the beginning of the year, and copper foil processing fees have also risen slightly due to the continued recovery in downstream operating rates. According to comprehensive China Merchants Securities estimates, the rise in copper prices since the beginning of the year is expected to bring about a 7% increase on the CCL cost side. Furthermore, the industry chain also determines that copper prices will maintain an upward trend in the medium to long term. However, the price of electronic glass fiber cloth has recently undergone a restorative price increase of about 7%. Estimates estimate that it will bring about a 1.5% increase on the CCL cost side. The price of epoxy resin is currently still in the historically low range, but recently there has been a slight increase.
The PCB industry's operating rate has benefited from improving downstream demand and maintaining a high level, and CCL already has the conditions to enter an upward channel of price increases. After the elimination of industry inventories in the past two years, the price of CCL has dropped sharply due to increased competition. Currently, the average price is 100-105 yuan/square meter, which is at the bottom of the cycle. According to our recent tracking, downstream demand is gradually improving. The PCB operating rate continues to increase month-on-month, and downstream customer orders are visible in January-February. In addition, the upward trend in upstream commodity prices has also prompted downstream PCB manufacturers to start lengthening the inventory cycle.
Therefore, China Merchants Securities believes that the conditions for CCL to begin an upward cycle of price increases this year are significantly better than last year. Currently, Jiantao Laminate and Meizhou Willy Bang have all issued price increase letters. Judging from the magnitude of the price increase, it is expected that the profit level of the CCL chain will gradually improve in the short term.
Investment advice:
The main recommendation is Shengyi Technology (600183.SH), the leading domestic CCL company; it is also recommended to continue to grasp the vertical integration layout of CCL and upstream main materials, and Jiantao Laminate Board (01888) and Jiantao Group (00148), which have high cycle flexibility.
Among second-tier CCL manufacturers, it is recommended to focus on CCL manufacturers such as Huazheng New Materials (603186.SH) and South Asia New Materials (688519.SH), which benefit from cycle flexibility and high-frequency and high-speed product upgrades, and Jin'an International (002636.SZ), which have high cycle price flexibility.
Among upstream main material manufacturers, focus on copper crown copper foil (301217.SZ), NORD shares (600110.SH), Jiayuan Technology (688388.SH), Fangbang (688020.SH), glass fiber leader China Jushi (), and electronic-grade epoxy resin manufacturer Hongchang Electronics (DAB), which benefits from the upward cycle of standard copper foil. 600176.SH 603002.SH
Risk warning: Prices of upstream raw materials fluctuate greatly; poor price and cost transmission; market competition increases risk; downstream demand growth falls short of expectations.