Citi: Fiberglass prices diverge: electronic yarn and fabric supply tight, prices stable; roving faces downward pressure

Why is there room for further increases in electronic yarn and fabric prices?

This week, mainstream transaction prices for G75 electronic yarn were 25,800–27,000 yuan per tonne, with an average of 26,137.5 yuan per tonne, unchanged week on week; 7628 electronic fabric remained at 13.0–13.6 yuan per metre, with small customers still paying above mainstream prices.
Downstream copper-clad laminate orders continue to rise, and orders for mid- to high-end standard electronic yarn and fabric have not declined noticeably. Meanwhile, supply of standard products is tight, inventories are low, and mainstream copper-clad laminate customers continue to face shortages.
Citi believes supply and demand conditions and transaction prices paid by small customers indicate that producers still have pricing power. November negotiations could bring further price increases, but their size and implementation depend on downstream acceptance.

Supply of imitation electronic yarn and fabric is gradually increasing, but demand for low-end imitations is weakening because of differences in quality and end applications, with limited impact on supply to mainstream copper-clad laminate producers.
Consequently, increased supply in parts of the industry can coexist with a shortage of standard electronic yarn and fabric; Citi's assessment of electronic material prices is based mainly on the supply and demand conditions behind the latter.

This week, mainstream transaction prices for 2400 tex direct winding roving fell to 3,300–3,700 yuan per tonne, with the low end of the range down 100 yuan week on week. The national average was 3,693.1 yuan per tonne, down 0.07% week on week but still up 4.78% year on year.
Some producers have converted roving lines to fine yarn, slightly reducing effective roving supply. However, new downstream orders are limited, processors' operating rates are low, and wind power orders have shown no obvious improvement. Customers are buying mainly as needed, and inventory pressure remains high amid weak shipments.
Citi believes production conversion has yet to significantly improve the balance between roving supply and demand, and weak demand and high inventories may force producers to make further price concessions.

Citi maintains its buy rating on China Jushi, with a target price of 71 yuan, corresponding to 17.3 times forecast 2027 earnings, in line with its historical average. The bank's 2027 earnings forecast already incorporates significant gains from stronger electronic fabric prices and an improved product mix.
Citi believes China Jushi's cost advantage and integrated electronic yarn and fabric platform give it greater earnings sensitivity during an upswing in electronic fabric prices. However, weaker-than-expected fiberglass demand, rising energy and electricity costs, or greater-than-expected new capacity could affect that assessment.