【In-depth report】Analysis of the price increase of copper clad laminates from the relationship between supply and demand

The sharp rise in raw materials has opened up the price increase of CCL, and most of the leading CCL manufacturers have achieved high premiums. Sinolink Securities found through the review that the price increase will eventually lead to three results, namely inevitable premium, continuous premium and raising the leading profit level. ), the determinant of the leading profitability level after the price increase is the relative bargaining power, so the key factors to be grasped in the price increase market are the relationship between supply and demand and relative bargaining power. Why is the premium now realized - the gap between supply and demand, and the increase in inventory demand mismatch. From the perspective of demand, the demand for copper clad laminates is expected to increase by 9.3% throughout the year, and in 2021Q1 notebooks, home appliances, mobile phones and other fields have shown a higher growth momentum than the whole year, so it can be said that the demand for 2021Q1 is over-released, and in 2021Q1 it faces downstream Inventory needs to replenish safety stocks, so demand in 2021Q1 is hot; from the perspective of supply, we see that the expansion rate of mainstream CCL manufacturers is only 6.7%, which is less than the growth rate of demand. The high production capacity makes the production capacity of small manufacturers not constitute effective production capacity, thus ultimately resulting in a tight supply and demand situation. How will the premium continue? - The premium will remain in 2021Q2, and the premium may be gradually narrowed in 2021H2. Sinolink Securities believes that the premium level can still be continued in the second quarter, but there will be pressure in the second half of the year, because: 1) Demand will basically continue in 2021Q2, and there will be pressure in 2021H2. Combined with changes in consumer demand and inventory levels, it is expected that applications with high growth in 2021Q2 will account for 41%, applications that maintain growth will account for 14%, applications that remain stable will account for 24%, and applications with inventory pressure will account for 21%. Compared with 2021Q1, it is weaker, but the overall prosperity is still maintained. Looking forward to 2021H2, applications with high growth accounted for 24%, applications that maintained growth accounted for 14%, applications that maintained stable accounted for 45%, and demand with inventory pressure accounted for 17%. The unique demand for replenishing safety stocks in 2021Q1 has gradually disappeared, so overall demand in 2021H2 is under pressure. 2) Part of the supply will be released in the second half of the year, but the overall supply is still limited. Most of the new expansion capacity of mainstream CCL manufacturers this year will be opened in the second half of this year, and the loose raw material prices are expected to release the production capacity of some small manufacturers. The force is released, so overall, the supply force is still tight this year. Therefore, looking at supply and demand, Sinolink Securities believes that the Q2 premium will continue, but there will be some pressure in the second half of the year. Relative bargaining power can still boost profitability. From the perspective of concentration, the concentration of CCL is still higher than that of PCB, and the increase in raw material prices has aggravated the difference between the concentration of CCL and PCB; The total financing amount of PCB projects reported for IPO reached 11.3 billion yuan, and the financing intensity has been another large-scale expansion and production since 2017. It can be seen that the expansion of PCB production is radical, which has pushed up the scarcity of copper clad laminates. Therefore, from two points of view, the relative bargaining power of copper clad laminates is high, and leading manufacturers can increase their profitability after the price increase. Factor analysis: The mismatch between supply and demand is the fuse, and the relative bargaining power forms a premium to ensure that the mismatch between supply and demand is the fuse for the premium. As the basic raw material of electronic products, CCL has a certain periodicity. From the perspective of the cycle, raw materials can have a higher premium relative to the downstream, mainly due to the mismatch between supply and demand. Specifically, in the 2016~2017 market, we can see: 1) Demand: consumer demand superimposed on inventory demand leads to hot consumption Sexual demand: From the results, the growth rate of global PCB production in 2017 reached 9%, and the sales growth rate of copper clad laminates reached 9%, mainly from the strong consumer demand for mobile phones, operator communications, and computers (from PCB It can be seen from the classification growth rate); inventory demand: from the "raw material purchase cash flow/sales cash flow" situation of PCB manufacturers, it can be seen that PCB manufacturers tend to make decisions to reduce stocking when raw material prices rise, which makes In the case that the demand in 2017Q1 is still strong in the coming year, PCB manufacturers urgently pull goods due to insufficient stocking, which will eventually lead to a situation where demand squeezes supply; 2) Supply: insufficient capacity expansion + insufficient effective capacity, resulting in tight supply and insufficient capacity expansion: According to According to the public information of the 7 major CCL mainstream manufacturers, it can be found that the expansion rate of CCL production from 2016 to 2017 is about 7%, which is less than the year-on-year increase in demand for CCL (9%), so it can be seen that the supply of CCL is tight. ; Dislocation of demand levels leads to insufficient effective production capacity: From 2016 to 2017, the demand for electronic products is mainly concentrated in relatively high-end mobile phones, operator communications and computers. Mainly) transfer part of the production capacity to competitive high-end CCL products (such products do not belong to the category of rising prices), resulting in insufficient effective production capacity of CCL; high raw material prices lead to insufficient effective production capacity: raw material prices are high in the price increase market, This allows only leading CCL manufacturers with capital strength to obtain sufficient raw materials, and only the production capacity with sufficient raw materials is effective production capacity. Therefore, it can be said that the increase in raw material prices limits the effective production capacity. It can be seen that to determine whether the CCL can achieve a premium, it is necessary to determine the matching relationship between supply and demand, then the change in the supply and demand relationship will affect the premium situation. Therefore, it is necessary to analyze whether the CCL manufacturers can make a premium in the price increase market and how the premium changes. The key It is necessary to grasp the relationship between supply and demand. Relative bargaining power forms a premium guarantee. As mentioned above, the difference between CCL and traditional periodic raw materials is that after the price increase market is over, the average level of leading CCL, whether it is unit price, unit gross profit or gross profit rate, exceeds that before the price increase. level, that is to say, the price increase has raised the profitability of leading CCL manufacturers (although some of this is due to the upgrade of CCL manufacturers’ product structure, but some manufacturers with slower product iterations have also seen a more significant increase in profitability. Therefore, Guojin Securities It is believed that the price increase will help the profit rise).