Analysis on the influence of rising price of raw materials on P

• Posted by David Yang June 14, 2022 Filed in Business #PCB industry  46 views
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  The Printed Circuit Board (PCB) is essential in electronic products, which are used either for domestic use or for industrial purposes. PCB design services are used to design the electronic circuits. Apart from electrically connecting, it also gives mechanical support to the electrical components.

  However, it is reported that the recent surge in raw material prices has led to rising costs in the PCB industry.

   

  

   

  The general price of raw materials rose sharply

  It is reported that since last June, domestic bulk commodities continued to rise. According to CCTV financial report: copper rose up 38%, paper 50%, plastic 35%, aluminum 37%, iron 30%, glass 30%, zinc alloy 48%, stainless steel 45%, IC 100%. Entering the end of February, raw material prices completely out of control, crazily jumped by 20%-30%.

   

  The price of raw materials is one price per day, which leads to the enterprises' inability to control the cost, and the production and operation are in chaos. For the current Chinese manufacturing industry, which has a serious shortage of domestic consumption demand and high corporate debt, it is devastating, and many PCB enterprises are also complaining about this.

   

  The cost ratio of each main material of PCB

  There are many kinds of raw materials needed for PCB production, mainly including copper clad plate (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, about 37% is the copper clad plate, 13% the semi-cured sheet, 8% the gold salt, 5% the copper foil copper ball. The ratio of labor cost is relatively high, about 11%, and the ratio of raw materials of different types of products is slightly adjusted. According to the different thickness of copper clad plate, the cost of glass fiber cloth accounts for 25% ~ 40% of the cost, the cost of resin accounts for 25% ~ 30%, and the cost of copper foil 30% ~ 50%.

   

  The rising price puts enormous pressure on PCB companies

  Data show that the Shanghai copper index has risen by more than 32% since 2021, and is now up to more than 70,000 points, at a new ten-year high position. In addition, glass fiber and resin prices are also at a high level. It can be said that the increase in the price of raw materials copper, which directly led to the rising cost of the PCB industry.

   

  As the copper clad plate industry has a high concentration, strong bargaining power and smooth price transmission to the PCB industry, the overall view is that the cost of PCB enterprises is sensitive to the price of the main upstream raw materials such as electrolytic copper foil, glass fiber cloth and synthetic resin, etc. The price rise effect will bring great pressure to the profit of PCB enterprises.

   

  In this national raw material price crisis, epoxy resin recently increased by more than 50%, polyester resin up 45%, titanium dioxide up 35%, the price will continue to soar. On the other hand, copper prices continue to soar to a new nine-year high, which also puts more cost pressure on PCB, IC board and other applications that rely on copper foil as the main material. According to media reports, upstream CCL manufacturers, from big company like Kantao, Nanya, to Taiwan Sanxiong Lianmao, Taioptoelectronics, Taiyao and niche CCL manufacturer Tenghui, have been raising prices for specific specifications. As the price of copper foil continues to hit a new high, the possibility of PCB upstream operators raising prices again is also increasing.

   

  It is widely believed that upstream CCL plants are likely to have to raise prices again in the first half of the year if the LME rally continues unabated and end demand remains robust.

   

  Orders are difficult to schedule

  Under the changes induced by 5G communication technology and non-mobile phone market application demands such as NB, tablet and wearable devices driven by the residential economy and the development of new energy vehicles, the demand for PCB will increase greatly.

   

  In this context, the price rise of PCB raw materials has led to a delay in the scheduling of new orders, especially for HDI and FPC in the middle and high-end fields. For PCB industry, there have been many price rises last year, and the impact of order scheduling may last for a long time. It is still unknown how the impact will be. Some said their order deliveries had been extended from the original half-month period to one and a half months, with some orders booked into the second quarter.

   

  In the last three months after the price of copper clad several times, its capacity shortage also began to occur frequently. According to the data, since the beginning of Q4 last year, the price of copper cladding, the increase space of 25%-30%, and the delivery period has also been extended to 8-10 days.