After the beginning of 2022, the price increase of PCB raw materials will gradually ebb, and the prices of major main materials have begun to stabilize and fall.

In the production of a printed circuit board, labor and manufacturing costs only account for 30%, and 70% of the cost occurs on the substrate CCL in the middle of the circuit board. The copper clad laminate is mainly produced by the three key materials of copper foil, resin and glass fiber cloth, which account for 35%, 18% and 18% of the production cost of the copper clad laminate respectively.

Let's first look at copper foil, which accounts for the largest proportion of material costs. The price of copper foil is mainly composed of copper price and processing fee. If these two parts of the cost are in an upward trend, it will naturally lead to a high rise in the price of copper foil, and vice versa.

Tracking the price of copper foil in the past year, it is found that copper foil peaked twice in May and October 2021. The average price of copper foil in May rose by about 22% compared with the beginning of the year, and began to gradually fall after the second peak in October. The price of copper foil continued to remain high last year, largely because of the shortage of lithium battery copper foil. New energy vehicles have developed rapidly after the epidemic has weakened. Last year, production and sales increased by 2.179 million and 2.154 million respectively, resulting in a shortage of lithium battery copper foil and a short supply in the market. Under the superposition of rising processing fees, copper foil prices rose rapidly.

After the price of copper foil fell back in October last year, it did not rise again. The price increase in the market will show a certain periodicity, and will not continue to increase prices. If the price is too high, on the one hand, it will be resisted by the demand side. The newly added copper foil production capacity will drive the price of copper foil down. The two leading domestic copper foil companies, Nord Co., Ltd. and Jiayuan Technology, have a combined existing lithium battery copper foil production capacity of 69,000 tons/year. The launched expansion projects include Qinghai lithium battery copper foil. The second/third phase of the project, Huizhou lithium battery copper foil project, Ningde lithium battery copper foil project, and Chaohua Technology also joined the expansion team, investing 12.2 billion in Yulin to expand the production capacity of 100,000 tons of copper foil. After the production capacity has increased, the price will naturally fall back slowly.

At present, there are too many large-scale expansion projects of copper foil, and it is very likely that there will be an embarrassing situation of overcapacity after 2022, and copper foil prices may not peak again. In February 2022, the average price of copper foil in the domestic market was 107,000 yuan per ton, and the high price was 109,000 yuan per ton.

In terms of fiberglass cloth, it began to weaken after the high point in June last year, and the decline will increase after September 2021, and the performance will continue to decline in 2022. The reasons for the decline of glass fiber cloth materials are mainly related to the control of inventory and reduction of purchases by enterprises at the end of the year, and the expansion of new production capacity of domestic glass fiber cloth giants. Since February, the mainstream price of electronic yarn has been about 10,500 yuan/ton, and the mainstream price of electronic cloth has been about 4.4 yuan/meter.

In terms of resin, it is mainly affected by bisphenol and epichlorohydrin. After rising for the second time in 9 years last year, it began to fall, continued to decline in October and November, and fell to 21,000 yuan/ton in December. After the Spring Festival in 2022, the price of epoxy resin will rebound and rise. On the first day after the festival, the liquid epoxy resin will rise by 200/ton in a single day. The prices of bisphenol and epichlorohydrin both exceed 19,000 yuan/ton. The situation is strong, and the cost of epoxy resin increases by 1,000 yuan after the holiday. The reason for the rise in the price of epoxy resin after the holiday, Zhang Wangqiang of Essence Securities believes that the demand side has increased and the downstream liquid epoxy resin has a strong trend. The supply side and domestic epoxy resin factories have low operating rates, the liquid epoxy resin operating rate is maintained at around 55%, and the overall solid epoxy resin factory operating rate is about 35%-50%. There is a parking plan to form a positive supply side, which will drive the price of epoxy resin to rise.

The two major prices of copper foil and fiberglass cloth are currently declining, which will further reduce the production cost of copper clad laminates, and the cost pressure of downstream circuit board manufacturers will gradually ease. And the demand in emerging fields such as new energy vehicles, 5G communications, and the Internet of Things continues to increase. Under the background of cost reduction, the performance of circuit board manufacturers will usher in a greater increase.