Copper foil shortage, why, how and what to expect!

Earlier this year we wrote in our blog about the elephant in the room. You know the one everybody knows is there, but nobody talks about – like copper foil shortage. Nine months later, the copper foil shortage is still present, but now perhaps better depicted as the “invisible” elephant in the room. At Elmatica we encourage open dialogue and information sharing in order to minimize the effect of unwanted situations.

The present global lead time development for components, with lead time increase for some components from 26 to 52 weeks lead, has resulted in a state of temporary stabilization of copper clad demand. However, once the component market stabilizes and or in conjunction with the increased battery production, one can expect a constrained supply situation.

With several governments now desiring a shift towards cleaner new-energy vehicles, and an all-electric automotive industry, the copper shortage will last longer than first anticipated. One thing is for sure. Now is the time to strategize, plan and inform. The copper output has not increased, and the demand for copper in lithium batteries is not reducing, the copper foil shortage still persist. There are no signs in the near future that it will change, especially now with the recent governmental statements from France, England, Scotland, Norway and China, who have all announced a possible future ban towards fossil fueled vehicles.

An aggressive zero-emission mandate
Let alone China’s goal that minimum one-fifth of all new cars in 2025 shall be electric, that´s 4 million cars per year in China alone and as of 23.11.2016, a total of 1 million pure electric cars had been produced globally. The electric car is also unique in relation to copper not only because of batteries and copper demand but the car is practically a computer on wheels rather than a car with a computer and the PCB demand is consequently significant higher.

China already has a quite aggressive zero-emission mandate, resulting in automakers significantly increasing their investments in electric vehicle production in the country. As the biggest car market in the world, it’s not hard to understand that a significant increase in production of electric cars for China, will affect the copper shortage, and the amount of copper foil reserved for producing printed circuits. It is estimated that there will be a 10 million ton copper foil deficit by 2028, that is around 40% of the copper demand in 2017.

Adding further tension to the copper shortage is China’s plan to ban waste imports, which is a significant source of recycled copper. Other actors will continue this work, however, it will create a temporary decrease in supply. These aspects and other elements as mines located in unstable countries, few new copper mines and shut down mines, will affect the supply chain of copper and it turns the copper clad foil situation for the PCB industry.

No time to lose
Mark Goodwin, Ventec COO EMEA & US, said in a press release in May: “Our market assessment is that the copper foil shortage has resulted in approximately 2.8M sheets per month CCL global material shortage. This is approximately 2x the total rigid demand of the USA and Europe combined. We expect the situation to last at least until the middle/end of 2018. Now is the time to work closely with your material supplier to secure your supply, and to pass on the inevitable increases in cost in your finished board prices.”

Now is the time to plan. The automotive industry will not shift overnight, the production line takes time to adjust. The continued shortage of glass yarn also reduces the output of glass cloth used in laminates and prepreg. One of the worlds largest CCL manufacturer has recently issued a notice to its customers, informing them of a reduced output until the end of 2017 due to insufficient glass cloth.

We are “feeling stable”
The current “feeling stable” situation of the CCL supply is most likely due to a decrease in orders placed and or postponement of the delivery of Printed Circuits over the last months. This is due to a lack of components and hence a short-term decrease in demand for PCB, and not due to an increase in the supply of CCL. The question is, what will happen over the next months when Chinese New Year is coming, copper is scarce and if the supply of components stabilize?

If everyone starts placing orders for Printed Circuits at the same time, then a new temporary shortage of CCL can be the end result.  We have for a long time advised our customers to prepare an accurate forecast, place orders in advance and plan for longer lead-time. Another strategy is to approve more than one type of laminate for a product and consequently increase the flexibility of supply.

This article was first published in the PCB Magazine.
Previous articles about the Copper foil shortage.


Didrik Bech, CEO Elmatica
Sources: https://www.researchandmarkets.com/research/jrtxzm/global_and_china

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