CCL industry is highly concentrated and has high cost control ability, CCL industry, CCL supplier, CCL manufacturer, PCB industry, high-end PCB manufacturer, shenzhen PCB manufacturer, Single sided PCB manufactuer, double-sided PCB manufacturer, multi-layer PCB manufacturer, HDI PCB manufactuer, High-speed PCB manufacturer, high-frequency PCB manufacturer, crude oil price trend, Copper price has a price increase trend,PCB for communication, shenzhen PCBA manufactuer
The CCL industry is highly concentrated and has high cost control ability

CCL is mainly composed of copper foil, fiberglass cloth and resin, while the CCL industry has a high concentration, especially for medium and high-end CCL suppliers are fewer. The world's top ten (ranked by output value) rigid copper-clad laminate manufacturers have a market share of over 75%, while PCB's top ten companies have a market share of about 53%, and the market share of the China’s top five CCL manufacturers are around 51.39%. The CCL industry is more concentrated than the PCB industry. CCL manufacturers have stronger bargaining power for downstream, and the price increases of raw materials such as copper foil, fiberglass cloth and resin can be better transmitted to downstream PCB manufacturers.

Figure 1, China's top five CCL manufacturers have a higher market share


 

Copper prices have risen recently and will be transmitted to cost ends such as copper clad laminates and copper foil. In the middle and high-end PCB manufacturing, there is a high requirement for the quality of copper foil. Since the equipment for producing high-quality copper foil, especially the key components, needs to be imported and has a long cycle, therefore, the expansion of copper foil production capacity is not only a large investment, but also an average period of at least one year, and the capacity growth capacity is slow. Since the second half of 2018, copper prices have entered the price reduction cycle, but since the beginning of the year, there has been a significant rebound. Copper prices will be transmitted to the cost end of copper clad laminates and copper foil.

Figure 2, Copper price has a price increase trend


 

The market concentration of the glass fiber industry is relatively high, and the cyclical cooling and environmental protection and production limits make supply tight. The glass fiber yarn is calcined into a liquid state in a kiln by using a material such as silica sand, and is drawn to a very fine glass fiber through a very fine alloy nozzle, and then several hundred glass fibers are twisted into a glass fiber yarn. The construction investment of the kiln is huge. The 30,000-ton kiln needs 400 million yuan, and the new kiln needs 18 months, which is a capital-intensive industry. Its industry concentration is relatively high. China's top five manufacturers: CHINA JUSHI CO., LTD., Taishan Fiberglass Inc., Chongqing international composite materials co., LTD., Shandong Fiberglass Inc., Sichuan Weibo Co., Ltd., and Changhai Composite Materials Co., Ltd., have concentrated more than 80% of their production capacity. From the supply side, the glass fiber electronic yarn/electronic cloth market continued to be sluggish in the early stage, the project orders decreased, and some suppliers of fiberglass kiln were shut down one after another. Under the new industrial policy, environmental protection restricts production made some low-end products low-end non-compliant companies to clear, in the short term, the production capacity is compressed and the supply is relatively tight.

The upstream material of the epoxy resin is higher, combined with environmental pressure to compress the production capacity. Synthetic resin has good mechanical properties, electrical properties and bonding properties, and is one of the important constituent materials of copper clad laminates. Different types of PCBs have different requirements for resins. Single/double-sided boards, multi-layer boards and HDI are mainly made of phenolic resin and epoxy resin. High-speed/high-frequency boards mainly use PTFE; currently suppliers from China Mainland and Taiwan mainly supply phenolic resin and epoxy resin. The upstream raw materials of epoxy resin (oxychloropropane, bisphenol A, etc.) are closely related to the global crude oil price trend. The cost of shale oil and the new regulations for ship burning may intensify the contradiction between supply and demand of crude oil in 2019, and there is still has some price increase pressure in epoxy resin.

Figure 3, UK Brent crude oil price trend (USD/barrel)

The environmental protection is mainly due to the non-compliance of environmental protection requirements of many manufacturers in Huangshan and Shandong, resulting in reduced production and production stoppages, or the need to improve processes due to environmental protection requirements, and the purchase of new machines to increase production costs, thereby promoting the continued rise in epoxy resin prices.

Upstream raw materials face pressure from price increases, and costs can be channeled to downstream customers to form a closed loop. The prices of copper clad laminates such as copper foil, fiberglass cloth and epoxy resin are facing upward pressure. At the same time, the PCB for communication faces the characteristics of high-speed and high-frequency, which requires the selection of resin materials in the upstream of the copper clad laminate and the increase in processing cost will further increase the price of CCL, while CCL manufacturers are more concentrated than PCBs, and CCL manufacturers can pass the cost increase to PCB manufacturers.

China’s high-end PCB manufacturing leaders are mainly in the field of communications, industrial control medical and consumer electronics. The supply market is highly concentrated and has a certain bargaining power for the downstream. And the mid-to-high-end PCB product certification cycle is long. Once the downstream customers choose the supplier, they will not be easily replaced, which has certain dependence on the PCB manufacturers that have entered the supply system. In the middle and high-end communication field, the communication PCB customer certification cycle is long, and the manufacturing process technology barrier is high. It takes more than three years from process development to product formation. Therefore, leading manufacturers have strong bargaining power, and new orders in the future are expected to achieve price transmission and achieve performance growth.