The Zhitong Finance App learned that Guosheng Securities released a securities research report stating that the copper-clad plate industry will enter a price increase cycle against the backdrop of rising upstream prices and a recovery in downstream demand. Benefiting from a good competitive pattern and a lengthening downstream preparation cycle, profitability is expected to gradually improve. It is recommended to focus on the industry leader Jiantao Laminate Board (01888) and Jiantao Group (00148), as well as A-share leader Shengyi Technology (600183.SH). For flexible varieties, it is recommended to focus on Huazheng New Materials (603186.SH) and New South Asian Materials (688519.SH).
Guosheng Securities said that it is optimistic about the subsequent favorable price market for copper clad plates, which will drive profit recovery. Since the beginning of the year, copper prices have risen by more than 20%. The copper-clad plate industry has recently begun to gradually improve prices. Guosheng Securities believes that subsequent copper clad plate will usher in a round of price increase cycle. The rise in upstream material prices is compounded by downstream inventory replenishment, forming an increase in the operating rate and smooth price process of copper clad plate manufacturers, thereby increasing the scale and profitability of copper clad plate manufacturers.
Copper clad plate is the main raw material for PCBs. The performance, quality, processability in manufacturing, manufacturing level, manufacturing cost, and reliability of the PCB largely depend on the copper clad plate used. Among them, the main materials for copper-clad sheets include copper foil, resin, glass fiber cloth, etc., and prices have all risen to varying degrees since this year. Jiantao Laminate, the leading copper-clad board company, issued a price increase notice on March 19, 2024. The price of all materials increased by 10 yuan/sheet.
Guosheng Securities believes that copper clad plates are expected to further lead the upward downward trend in raw material prices in the future, and the profit level is expected to gradually recover. The reasons are as follows:
The supply pattern of the copper-clad plate industry is concentrated: The supply pattern of CCL for copper-clad plates is more concentrated than that of PCBs. According to statistics from the China Commercial Industry Research Institute, the share of the top ten CCL copper clad plate manufacturers reached 75% in 2020. Prismark statistics show that the share of the top ten manufacturers in the PCB industry in 2021 was only 36%. The high market concentration in the copper-clad plate industry makes copper-clad plate manufacturers have strong bargaining power and are more likely to pass on rising costs, etc., so it is expected that the price increase can be smoothly transmitted as upstream copper prices continue to reach new highs.
Under favorable price expectations, the downstream preparation cycle may be lengthened: in 2024, the demand boom of downstream PBC manufacturers will also pick up. Downstream demand for servers/switches, home appliances, automobiles, etc. is picking up to a certain extent. In addition, the current inventory level of PCB manufacturers is at a low level after 23 years of elimination. Since the beginning of the year, commodity price increases have also begun to gradually form expectations that copper clad sheets will be favorable. PCB manufacturers may gradually begin to lengthen the preparation cycle for copper-clad plates.
Prices of upstream materials have further upward momentum: currently, copper prices are still in an upward channel. At the same time, due to factors such as production capacity, glass fiber cloth, etc. are also being revised one after another. As the price of raw materials continues to rise, copper clad sheets are expected to continue to be favorable, further transmitting the price of raw materials.
Currently, the operating rate of leading copper-clad plate manufacturers is gradually increasing, reflecting the recovery in the downstream economy, while also providing support for price increases. After the price increase, it is expected not only to cover the price increase of raw materials, but also to obtain a certain amount of excess profit.