Comment: Prices for PCB materials

The surge in demand in Asia was sudden and intense; it has hit all players within the supply chain rather unprepared. The raw materials for laminate are: about 20% resin (only 5 producers worldwide), 30% glass fibre (only 5 manufacturers) and 50% copper foil (17 producers, of which half produce exclusively in-house). Due to the recessionary slowdown in demand, several glass furnaces were shut down. The special quality required for the electronics industry was—in an economically sound way—impossible to produce. However, once a furnace is shut down, it will take months before it can be used productively. Resins are petroleum products and—as prices remained the same for a long time due to recession—a little bit of ‘catching up’ needs to be done (price in January 2009 was USD 40, now it is USD 85.30) The price for coarse copper has hiked by 150% since in January 2009 (from USD 3’070 to USD 7’660 per ton). The already mentioned price increases (more are very likely in the next few weeks) for laminates have to be ‘passed on’ by the PCB manufacturers; it is essential to their survival. Even more problematic than the price hike is actually the shortage in laminates. Many established electronics products continue to enjoy a good demand, not least due to additional features and new programs. However, new products have also entered the market (e.g. tablets) and the general demand has picked up in almost all industry segments. Asian PCB manufacturers are already running on maximum capacity (this usually happens at the end of 2Q, when the Christmas season begins). The number of PCB orders that have been pulled out of Asia is constantly increasing. Therefore, a number of European manufacturers has been running on full capacity too. Increasing delivery times (of several months already) is proof enough. Thus, all laminate manufacturers are also running at full capacity. New capacities (in Asia) are planned, but it will take several months for them to deliver anything. It has to be noted that the new capacities are being built not for standard material, but for halogen-free qualities (higher prices and with it a better return). We will be facing a global allocation of basic material, which will affect the industry much more than anything else. The laminate capacity that still exists in Europe is far from sufficient to supply the local industry. Some Asian suppliers have already opted out of the European business several weeks back. The remaining trading companies will not be able to meet the sudden increase in demand. It is going to be hectic and only the best of relationships between customers and suppliers will be able to secure a reasonable supply. We thank Michael Gasch for his comment and explanations. Note to other media. The above information has NOT been provided in any public Press Release. Republishing, without naming the source, is strictly forbidden and would lead to prosecution.