Guosen Securities has released a research report stating that the AI industry is initiating a "PCB semiconductorization" trend, with significant value shifting from copper cables and connectors to PCBs. This directly drives the upgrade of copper-clad laminates from the M8/M9 material systems to the M10 high-end system corresponding to Rubin Ultra, leading to a sustained increase in the unit value of CCL. Geopolitical tensions in the Middle East persist, and the firm expects the average price for Brent and WTI crude oil to remain in a relatively high range of $85-95 per barrel in 2026.
Looking ahead to June 2026, the firm anticipates a steady recovery in domestic chemical demand and the continued release of demand from high-tech manufacturing. Focusing on the themes of resource scarcity and import substitution, the report highlights sectors such as crude oil, potash fertilizer, electronic resins, high-purity silicon tetrachloride, and fluorochemicals. The main viewpoints of Guosen Securities are outlined below.
AI Industry Advancement and PCB Evolution
The accelerated implementation of AI and sustained capital expenditure by global tech giants on computing power are driving steady, high growth in AI server shipments, which serves as the core driver for the sector. The iteration of Nvidia's Vera Rubin architecture is reshaping the positioning of the PCB industry. PCBs are evolving from traditional circuit connection carriers to core media for high-speed rack interconnection, marking the beginning of "PCB semiconductorization." This shift transfers significant value from copper cables and connectors to PCBs, directly prompting the upgrade of copper-clad laminates from M8/M9 to the high-end M10 system, thereby continuously elevating the unit value of CCL.
Upstream raw material segments are experiencing a combined boost in volume and price. First, specialty electronic resins, as key modifiable organic raw materials in CCL formulations, have low dielectric constant (Dk) and dissipation factor (Df) as core indicators for high-end applications. Resins such as PPO (polyphenylene oxide), hydrocarbon, and PTFE (polytetrafluoroethylene) meet the demands of new-generation high-speed laminates, accelerating the pace of import substitution.
Second, low-dielectric glass fiber electronic cloth faces supply-demand tightness due to constraints from high-end loom capacity and process barriers, representing a current bottleneck in the CCL supply chain.
Third, functional silica powder is evolving from a conventional filling auxiliary material to a core component determining the dielectric properties of laminates. Product iterations towards ultra-fine particle size, low loss, and high filling significantly increase the added value per unit.
Crude Oil Market Dynamics
Continued geopolitical tensions in the Middle East, along with slower-than-expected normalization of traffic through the Strait of Hormuz, persistently restrict the export of crude oil and LNG from the Persian Gulf. The extended recovery cycle for Qatar's damaged LNG facilities keeps European TTF natural gas prices volatile at high levels, continuously dampening the operational willingness of European chemical plants.
On the supply side, OPEC+ is scheduled to hold a monthly meeting on June 7th, with the market widely anticipating a modest production increase of 188,000 barrels per day in July. However, the actual transportation capacity gap caused by Middle East geopolitics is difficult to compensate for through production increases. Coupled with the US entering its summer gasoline consumption peak, rising refinery operations driving a recovery in crude oil demand, and global commercial crude oil inventories remaining at low levels over the past five years, multiple factors support international oil prices staying at elevated levels.
As of June 2nd, WTI and Brent crude oil futures settled at $93.76 and $96.00 per barrel, respectively, up 39.9% and 32.5% from the end of February. The firm expects the average price for Brent and WTI crude oil to remain in a relatively high range of $85-95 per barrel in 2026.
Supply and Demand Landscape in Chemicals
On the supply side, fixed asset investment in the chemical raw materials and chemical products manufacturing industry has turned negative on a cumulative basis since June 2025, with capital expenditure across basic chemical sub-sectors declining for multiple consecutive quarters, signaling the end of a large-scale industry-wide expansion cycle. The deepening implementation of domestic "anti-involution" industry rectification policies in sectors like pesticides, general petrochemicals, organic silicon, and PTA is curbing cut-throat low-price competition and accelerating the exit of outdated, inefficient capacity.
Tighter approvals for new energy-intensive projects continue to optimize the industry's supply structure, gradually shifting the overall supply-demand balance from surplus to a structurally tight equilibrium.
On the demand side, regarding traditional chemical demand, the sustained positive trajectory of the domestic economy and a slow recovery in end-user sectors like real estate, home appliances, and packaging support a mild recovery in the essential demand for traditional chemicals such as chemical fibers, chlor-alkali, and fertilizers.
Beyond AI driving demand for new materials upstream of CCL, emerging demand includes the expansion of optical fiber preform capacity boosting demand for high-purity silicon tetrachloride, and the growth of the lithium battery and liquid cooling industries continuously driving incremental demand for fluorochemical new materials like PVDF and fluorinated fluids. Multiple emerging sectors are opening up growth space for the chemical industry, alongside sustained growth in Chinese chemical exports.
China's Manufacturing Purchasing Managers' Index (PMI) stood at 50.0% in May, at the critical expansion-contraction threshold. The PMI for high-tech manufacturing reached 52.9%, and for equipment manufacturing, 52.1%, both significantly outperforming the overall manufacturing sector, reflecting higher景气度 in AI-related industrial chains compared to traditional manufacturing.
Macroeconomic and Chemical Product Price Trends
In May 2026, China's Composite PMI Output Index was 50.5%, up 0.4 percentage points month-on-month, indicating marginal improvement in production景气度 across all industries. The Manufacturing PMI was 50.0%, down 0.3 percentage points month-on-month, showing a slight weakening in manufacturing景气度. As of June 2nd, the China Chemical Product Price Index (CCPI) stood at 4913 points, having retreated from 5317 points at the end of April (-7.6%), indicating structural divergence in chemical product prices.
Key Sector Recommendations
Looking ahead to June 2026, with steady recovery in domestic chemical demand and the continued release of demand from high-tech manufacturing, and focusing on the themes of resource scarcity and import substitution, the report highlights the following sectors.
Crude Oil
Continued geopolitical tensions in the Middle East and slower-than-expected normalization of traffic through the Strait of Hormuz persistently restrict crude oil and LNG exports from the Persian Gulf. Current crude oil production from major Middle Eastern producers has declined by approximately 14 million barrels per day. Combined global petroleum inventories observed in March and April fell by 250 million barrels, and by the end of May, cumulative global crude oil production losses may have exceeded 1 billion barrels. The firm believes the global crude oil supply-demand situation continues to deteriorate, with near-term upside price risks and a significant medium-term upward shift in average prices. The report recommends CNOOC Ltd and PetroChina Co Ltd.
Potash Fertilizer
The global potash fertilizer market is oligopolistic with slow deployment of new capacity. Overseas agricultural procurement seasons support international prices. Domestically, scarce local potash resources and high import dependency, coupled with ongoing inventory replenishment for cash crop fertilizers, optimize the supply-demand balance. The report recommends Asia-Potash International Investment (Guangzhou) Co Ltd, which possesses high-quality potash salt deposits in Laos, with capacity continuously being deployed and scaled, offering ample long-term growth potential.
Electronic Resins
High prices for crude oil and bromine, influenced by geopolitical factors, elevate production costs. AI computing infrastructure construction drives rapid expansion in demand for high-end PCBs and copper-clad laminates. Downstream manufacturers are passing on cost increases, tightening the supply-demand balance for electronic resins. The report recommends Shengquan Group Share Holding Co Ltd, which has achieved import substitution for multiple categories of electronic resins.
High-Purity Silicon Tetrachloride
Accelerated data center construction domestically and overseas, combined with multiple domestic fiber optic companies expanding preform capacity, along with steady progress in semiconductor localization, drives high growth in demand from two downstream sectors for high-purity silicon tetrachloride, promising simultaneous volume and price increases for the product.
Fluorochemicals
Annual quota reductions for second-generation refrigerants and strict control of third-generation quotas maintain a tight supply-demand balance in the industry. Expansion in the liquid cooling and lithium battery industries drives demand for fluorine-containing materials such as fluorinated fluids, PVDF, and PTFE, sustaining sector景气度. The report recommends Zhejiang Juhua Co Ltd, Shandong Dongyue Polymer Material Co Ltd, and Zhejiang Sanmei Chemical Ind Co Ltd, which have comprehensive industrial chains and significant quota advantages.
Risk warnings include fluctuations in raw material prices, fluctuations in product prices, and weaker-than-expected downstream demand.
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