Guosen Securities has released a research report indicating that KB LAMINATES (01888) has issued a price increase notice, raising the prices of laminates and PP prepreg by 10%. This adjustment is primarily due to significant price increases in upstream core materials such as resin and electronic fiberglass cloth. As a key raw material for PCB, electronic resin is experiencing a high-growth cycle, driven by strong downstream demand and rising upstream material costs. Both cost and demand factors are supporting the continuation of this favorable market environment. The main points from Guosen Securities are as follows:
On April 3, 2025, KB LAMINATES announced a price hike, increasing laminate and PP prepreg prices by 10%. The main reason for the increase is the substantial rise in prices of upstream core materials like resin and electronic fiberglass cloth. Electronic resin, being a crucial raw material for PCB, is benefiting from a high-growth cycle influenced by downstream demand and rising upstream costs.
On the cost side, electronic-grade resin is one of the most important raw materials for manufacturing PCB. The selection of the resin matrix is particularly critical in the formulation design of CCL. Recently, prices of resin raw materials have risen significantly, supporting the increase in electronic resin prices. The mainstream resin for ordinary CCL is epoxy resin, with key raw materials including bisphenol A, epichlorohydrin, tetrabromobisphenol A, and acetone. For low-loss and ultra-low-loss CCL, resin systems such as PPO, BMI, and hydrocarbon resin are used, with main raw materials being phenolic or hydrocarbon-based substances.
Since the outbreak of the U.S.-Iran conflict in late February, Iran's blockade of the Strait of Hormuz has led to a sharp increase in crude oil prices. Most organic chemical products are derived from crude oil processing, and their prices have followed the upward trend of crude oil. To meet specific flame-retardant requirements of CCL, some organic raw materials contain bromine functional groups. After the U.S.-Iran conflict, bromine supply from imports has decreased significantly, and domestic bromine producers are holding back supply to maintain prices, leading to a rapid increase in bromine prices. Japanese specialty chemical giant DIC has issued a price increase notice, with a maximum hike of 280 yen per kilogram.
On the demand side, the rapid development of artificial intelligence technology is driving demand for AI servers, data storage, and other network infrastructure, leading to a rapid expansion in the PCB market. The supply and demand for electronic resin remain tight, and the high-growth cycle is expected to continue. According to Prismark data, total data center capital expenditure in 2025 is projected to be $376.7 billion, a year-on-year increase of 71%. Based on guidance from various companies, data center capital expenditure in 2026 is expected to reach $608 billion, with a growth rate exceeding 60%. The trend toward high-end PCB in servers directly increases the value of PCB. Combined with strong server demand, the market space for server-related PCB is also entering an upward cycle. The PCB market size is expected to grow by 15.8% year-on-year in 2025, with an average annual growth rate of 7.7% over the next five years.
Investment Recommendation: The firm recommends Shengquan Group. The company entered the electronic chemicals sector in 2005 and, through years of dedicated effort, has achieved localization of upstream raw materials for CCL/PCB and electronic packaging, such as electronic-grade phenolic resin and specialty epoxy resin. Its market share has been increasing annually. The company now offers comprehensive solutions for the entire product series from M4 to M9.
Risk Warning: Risks include intense competition leading to product price declines and reduced profit margins, production safety risks, and international trade friction risks.
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