China PCB upstream materials has continued to soar

In the beginning of 2021, the price of China PCB upstream materials has continued to soar, especially the rise of China upstream material factories is even more serious. Many local PCB factories have expressed their inability to cope with it, and even the major manufacturers in the industry are deeply pressured. Some big companies frankly said that the raw materials are soaring. It brings a lot of pressure to operations, and we can only overcome this crisis by strengthening management, upgrading technology, and actively communicating with clients. The situation of small and medium-sized PCB factories is even more difficult, and even some manufacturers have said that they dare not take orders casually. It can be seen that the soaring raw materials have brought a certain degree of impact on the China PCB industry.

The soaring of copper price on the London Metal Exchange (LME) is the result of the continued depreciation of the U.S. dollar. However, in addition to this factor, the entire market has soared demand for various electronic products and electric vehicle batteries, making the supply of copper foil in short supply, which is also a key point.

As far as the overall environment is concerned, the unstoppable price increase has the greatest impact on low-end products, because low-end products do not have much room for profit, although some customers are also willing to give these low-profit products price spaces, since most of these products come from the consumer electronics field, customers are more cost-sensitive, and PCB manufacturers are not sure that they can completely pass on costs increase to customer.

Therefore, recently, China PCB factories have felt the dilemma that they dare not accept orders. Although the market seems to be booming and the demand for customer orders is strong, the price adjustment speed of signing orders is mostly unable to keep up with the subsequent surge in raw material prices. It may fall into a situation that the more orders, the more losses. Few China PCB manufacturers pointed out that some relatively low-end basic raw materials are currently in short supply, and the industry is generally in a situation where they do not follow the market to increase prices and rush for materials. Therefore, there is a saying in the market that they dare not take orders casually.

Relevant industry sources revealed that although the entire supply chain is busy placing orders and grabbing goods, the overall economic situation is still uncertain. Therefore, except for a few specific customers, most end customers cannot accept PCB factories' unrestricted transfer of the soaring cost of upstream raw materials. After all, end consumers are more price-sensitive.

The relevant supply chain industry is concerned about whether this wave of cost increases will cause a new wave of resource integration in China PCB production capacity?
Although many China companies are currently striving to transform into high-end products, most small and medium-sized PCB factories still enter the automotive electronics and general consumer product markets through price reduction competition. In the environment of soaring costs, can this strategy be maintained? It needs further observation.