The biggest concern for PCB manufacturers right now is the price trend associated to copper-clad laminate (CCL) raw materials. In addition, epoxy resin, bisphenol A (BPA a chemical produced in large quantities for use primarily in the production of polycarbonate plastics and epoxy resins) along with glass fiber have also seen steep price increases since the beginning of the year causing the broader PCB industry to pass these price increases along to their customers. Strong end-market demand is fueling the extension of lead times and the overall price increases for copper-clad materials.

What You Should Know

• We have forecast continued price increases based on discussions with our raw material suppliers. In the short term, most of the price increases are in low to mid-end materials. The high-end product category has been more profitable, therefore, the price increase may be delayed as a function of the rebound in the communications segment.
• It’s important we provide long-term visibility to our suppliers and don’t plan for any short-term flexibility in supply.
• We will continue to work closely with our suppliers to manage new product introductions as many will only accept orders that are aligned with previous run rates.

CCL Materials Cost Drivers

Prices have risen steadily in 2020, with leading CCL manufacturers announcing price increases of 20%-30% since mid-2020. As the cost of raw materials such as electronic copper foil, resin and glass fiber have risen, the cost for manufacturing CCL has soared as well.

PCB manufacturing requires several raw materials, including CCL, laminates, copper foils, copper balls and substrates, such as prepregs. Among the raw materials, CCL is the key substrate within the manufacturing process, representing the majority share of the cost of PCB raw materials.

Note the cost of raw materials as a percentage of overall CCL cost are as follows:

• Copper foil: 30-50%
• Glass fiber: 24-40%
• Resin: 25-30%

Fires and Explosions Disrupt Supply Lines

In November and December 2020, two major explosions at epoxy resin plants in China had a large impact on domestic resin suppliers. The first explosion occurred at the Guodu Chemical Resin plant, the second occurred at the Xingya plant in Suzhou. These two explosions in such a short amount of time disrupted the supply of resin and has caused prices to increase dramatically.

In November, defective equipment resulted in a fire at the LG Chemical Yeosu plant in South Korea, disrupting the production of ethylene and propylene chemical used in the resin supply chain.

Raw material suppliers have predicted that the future price of bisphenol A (BPA) will be affected and that epoxy prices are forecasted to rise in the short term.

As a result of all the supply disruptions in the resin supply chain, epoxy supply has tightened and price levels have become extremely volatile - doubling in less than two hours on the spot market.

Material suppliers around the world are dealing with these ramifications. The increased demand, static capacity, industrial accidents, and the global pandemic have all come together to cause longer lead times, reduced availability, and upward price pressure for key raw materials. The situation is so serious according to the laminate manufacturers that today more than ever, owning and controlling the complete supply chain of PCB materials including laminates and prepregs from end to end is critical for continuity of supply. 

It is worth noting that after an explosion/fire, local authorities conduct thorough audits on the safety of epoxy resin manufacturers and other raw material suppliers. In addition, with increased regulations in many countries and the goal to decrease atmospheric emissions, some epoxy resin companies cannot operate at full capacity.

Raw material suppliers are currently running at 80-90% capacity, putting tremendous strain on their infrastructure. As a result, they have adopted measures to raise prices in order to control incoming orders, with little relief forecast for the next 6-9 months. 

Copper Foil

The cost of copper foil is crucial to the price of CCL laminates. The COVID-19 pandemic has had a major impact on countries that produce copper. Top copper-producing countries; United States, Canada, Zambia, and Chile have all raised concern over production and supply in the market, leading copper prices to multi-year highs.

Within China, as part of the post-pandemic recovery, the price of non-ferrous metals (including copper) – one of the basic industrial raw materials – has been rising with new demand. With government infrastructure construction expenditures also increasing in 2020, new infrastructure urbanization construction has continued to raise the demand for industrial metals.

In the second half of 2020, the price of electrolytic copper passed 50’000 CNY/ton. By November, the average price for electrolytic copper was 52’000 CNY/ton.

Glass Fiber 

The demand for glass fiber typically follows a cycle, and demand has grown steadily along with the economic recovery starting in the second half of 2020. On the supply side, there has been minimal capital expansion since 2019, but constant demand from the wind power sector and infrastructure companies has allowed the glass fiber market to rebound. Three leading Chinese glass fiber companies have raised prices since September and are forecast to continue raising prices moving forward. 

In general, the rise in CCL prices follows the same pattern. First, the continued increases for raw materials passed on to their customer. Secondly, the lockdown conditions worldwide and some new policies implemented by the Chinese government to help the automobile market rebound are driving additional demand. With more consumers buying cars and home appliances, the demand for CCL continues to increase. Industry analysts are forecasting price increases throughout 2021.

Due to the strong demand and increased raw materials costs, some CCL manufacturers are pivoting to only accepting orders from existing customers and reviewing historical run rates to avoid speculative ordering. Some manufacturers are concerned that they will NOT be able to secure the raw materials, even at a higher cost.

Suppliers continue to respond with price increases. Major laminate suppliers, Kingboard Laminates, ITEQ, Shengyi and Nanya all announced price increases in November/December 2020 and are signaling further increases throughout 2021.

If you have any questions or need additional information, please do not hesitate to contact me directly (allan_clark@jabil.com).