PCB volume and price are rising! Talk about a leading company

Since the beginning of this year, many metal prices have shown a rapid upward trend, which has also greatly affected many mid- and downstream industries. I have also told you a lot before.

Recently, the fluctuation of copper prices has gradually stabilized. Today, let`s take a look at its related downstream PCB industry, that is, the circuit board industry. What is its logic.
The raw material required for PCB production is copper. Specifically, the cost of its raw materials is the copper clad laminate (CCL). In the cost of the copper clad laminate, glass fiber cloth, copper foil, and epoxy resin together account for more than 70 %, the proportion of copper foil will reach about 40%. In this way, the fluctuation of copper price will have a great impact on the cost of PCB production.

Copper foil is a capital-intensive industry with a high degree of market concentration. The top 5 industry has a market share of 50%. It has strong bargaining power for the downstream, especially when copper foil inventories are in short supply. Copper foil manufacturers have a stronger voice in prices. .
Therefore, copper clad laminate manufacturers have the ability to transfer rising raw material prices through price increases, and smoothly transfer costs to downstream PCBs, in order to maintain or even increase gross profit margins. In this way, the performance of PCB companies will be compressed.
From the relevant data, we can see that from last year to the third quarter of this year, copper clad laminate companies have experienced several price increases. However, after entering the third quarter of this year, the pace of price increases of various copper clad laminate manufacturers has slowed down significantly, and only a few manufacturers have responded. The prices of some products have increased slightly.
Does this mean that the prices of upstream raw materials are gradually stabilizing, the production capacity of copper clad laminates will be further released, and the price of copper clad laminates will gradually stabilize? Then its downstream PCB will gradually pass on the cost to the downstream, and profitability is also expected to recover?
In addition to the impact of raw materials, another factor to be mentioned here is the impact of the appreciation of the renminbi. At present, the overseas revenues of several leading companies will account for a relatively large proportion. For example, the overseas revenues of World Games Circuits accounted for up to 86%, and the overseas revenues of Pengding Holdings, Shanghai Electric Co., Ltd., and Shennan Circuits accounted for 71% respectively. , 64%, 64%.
When the renminbi appreciates, great exchange losses will occur. Now the renminbi exchange rate has stabilized, and the impact of exchange losses on the profitability of companies has also become smaller.
In the context of stabilizing upstream costs, let's see if its downstream demand is booming.
Although this logic is good, everyone should pay more attention to the changes in the prices of upstream raw materials, because the current attitudes of various institutions to their price trends are different. If the prices of upstream raw materials rise sharply again, they will be The performance of the enterprise has a great impact.