Material price escalation thrives PCB industry chain?

Material price escalation thrives PCB industry chain?
Prices up as scrambling for copper and materials begins

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The price of upstream materials of the PCB industry has been escalating over the last year, particularly the copper price, which has surprised people as the escalation soared. In addition to “copper,” the price of “glass yarn,” and “epoxy” escalated due to undersupply.

   Copper is the most fundamental and essential part of PCB making, whether they are single-layered or multilayered boards, copper consumption is surprisingly huge. From mid-2020 to the present day, the copper price has been escalating from US$5,200/MT to US$10,000/MT, and was once up to US$10,500/MT, a historical high.

Observations show that the copper price escalated for the following reasons::

  1. Copper demand escalates from the thriving development of electric vehicles (EV) in response to the international environmental protection initiatives: According to Seeking Alpha, an investment website, the average copper consumption per traditional vehicle is about 20kg, while it is 75kg per EV.
  2. Copper demand escalates in all industries during the global economic recovery after the launch of COVID-19 vaccines.
  3. The copper price soared when the Australian copper export dropped after the China–Australia relationship deteriorated.
  4. The price of copper and other metals also rose when China engaged in massive infrastructure construction.
  5. The copper price continues to rise alongside the undersupply of raw materials. Enterprises increase copper purchases for fear of copper shortages, spurring copper price escalation.
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Figure 1 Copper quotation chart
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Figure 2 Copper mines
Although PCB makers can request a price adjustment from customers according to the changes in the raw material price, the price volatility of copper and related raw materials has been too vigorous over the last year. In consideration of the acceptance of majority customers and order growth potential, most PCB makers simply absorbed the increased cost silently at the beginning before adjusting the price to reduce the loss. Although the overall revenue seems to escalate, as the range of increase cannot keep up with the price escalation of raw materials, PCB makers could only slightly mark down or keep the gross profit.
   The situation in the next half of the year is still going to be tough for the PCB industry. Besides the international copper price being pushed to US$20,000/MT, the undersupply of prepregs and the waiting days have become severer and longer than before. Alongside the ongoing capacity increase and increasing orders for material preparation in different industries, a slowdown of price rises and the shortening of delivery lead-time will not come so soon in the PCB industry.
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