Financial Services Association, April 17 (Reporter Lu Tingting) Many companies in the glass fiber industry have had a difficult time due to the effects of product price depressions for a long time, compounded by rising costs. Over the past few days, manufacturers including China Jushi (600176.SH) and Jiantao laminated board (01888.HK) have successively made restorative price adjustments on electronic grade glass fiber yarn and glass fiber cloth (electronic yarn/cloth for short) products. CIFA reporters learned in multiple interviews that e-yarn and e-cloth generally increased by 600 yuan/ton and 0.2-0.3 yuan/meter. A person from a glass fiber company said bluntly to the Financial Federation reporter, “We can't continue with the loss, so the price is being reinstated. It's not a price increase; the price may go up in the future.”

A Financial Services Association reporter called China's Jushi Securities Department and learned that since April 15, the company has made restorative adjustments to the prices of related products, increasing electronic cloth by two cents to three cents, and increasing electronic yarn by 400 to 600 yuan. According to the source, “Because some customers are locked in, the price increase this month is about 30% (customer), and 90% will be adjusted to this price range next month.”

China Jushi price adjustment notice circulated on the Internet

According to information, a number of industry manufacturers, including Jiantao Laminate and Henan Guangyuan New Materials Co., Ltd., recently issued price adjustment notices, adding 600 yuan per ton of G75 yarn and 0.2-0.3 yuan per meter of 7628 electronic cloth. Zhuochuang Information said that currently, the mainstream price of electronic yarn is expected to be no less than 8,000 yuan/ton after the repricing of the G75, and the price of electronic cloth 7628 is between 3.4 and 3.6 yuan/meter after repricing.

“This round of price increases is affected by rising prices on the cost side and long-term profit losses. In addition, the market has good expectations for demand in consumer electronics and other fields during the year, and price increases appropriately can stimulate the release of some demand orders in stages.” Liu Yang, an analyst at Zhuochuang Information, told the Financial Federation.

“Repricing” may have been a helpless move. Jiantao's laminated board sales channel personnel said, “Now many raw materials have gone up.” According to several price adjustment notices obtained by the reporter, many manufacturers are in a state of loss on products with relevant specifications due to the continued low price of electronic yarn/cloth products.

Furthermore, according to the disclosed annual reports and performance forecasts, the net profit of companies such as China Jushi, Sinoma Technology (002080.SZ), Shandong Glass Fiber (605006.SH), International Composites (301526.SZ), and Changhai Co., Ltd. (300196.SZ) all experienced varying degrees of decline year-on-year in 2023. The main factors were “low prices” and “sharp drop in sales prices” of glass fiber products.

Under these circumstances, the gross margin of China Jushi's “glass fiber and its products” fell 13.97% year on year to 27.57% in 2023. Changhai Co., Ltd. stated in its annual results forecast that sales and gross margin declined year-on-year due to the decline in sales prices of glass fiber products.

A Finance Association reporter also noticed that Sinoma Technology's glass fiber and its products achieved net profit of 1 billion yuan in 2023, down 1.81 billion yuan from 2.81 billion yuan in the same period in 2022. The company said, “The decline in gross margin had a big impact on net profit.” However, due to falling product prices, the gross margin of Sinoma Technology's glass fiber products fell 9.80% to 22.62% year on year in 2023.

In fact, “Since 2022/Q1, the electronic cloth industry has been losing a large area of money for a long time.” An analysis by Minsheng Securities mentioned that the e-brokerage price was reinstated twice in October 2022 and September 2023, but the final implementation was average.

So, after the “repricing”, did the price of glass fiber products return to normal levels? A person from a listed company told reporters, “It's too far. We won't be able to return in the short term. The current price is still low, and the impact on gross margin is relatively limited.”

“Repricing” has become the key for major companies to save their performance. Sinoma Technology responded to investors yesterday on Interactive Easy, saying that the prices of some of the company's glass fiber products have also rebounded recently. Furthermore, at the end of March, China Jushi had already repriced some thick yarn products. The company said, “Judging from the current implementation, the prices have been implemented quite well.” Regarding the repricing of electronic cloth, Yang Guoming, general manager of China Jushi, said that it will have a positive impact on the company's further improving profitability and achieving sustainable development.

Looking ahead to the future market of fiberglass cloth, Liu Yang believes that current market demand is being released slowly. Supported by cost pressure, prices may stabilize in the short term after rising; in the medium to long term, prices are still expected to rise to a certain extent as demand gradually recovers.

It is worth noting that glass fiber cloth is one of the main raw materials for the manufacture of copper-clad panels. In the context of “repricing,” downstream related companies have also responded.

As an investor, the reporter learned from the securities department of the copper-clad plate manufacturer Shengyi Technology (600183.SH) that the three main materials (copper-clad plate), “copper foil, glass fiber cloth, and epoxy resin” account for about 70% to 80% of the cost, of which glass fiber cloth accounts for about 25%. The company will adopt a corresponding strategy to respond according to specific needs, operations, etc.

A staff member of the securities department of Shenghong Technology (300476.SZ) said that in fact, we don't buy glass fiber cloth, but we also buy copper clad sheets. In addition, glass fiber cloth is also used on PP glue, so it accounts for a very low proportion and has no direct impact.

The final implementation effect of the e-yarn/cloth price repricing and its impact on copper-clad plate manufacturers is yet to be tested.