Japan's Earthquake Depth Affects Global Aluminum Capacitor Industry Supply

Short-term: The global supply of aluminum electrolytic capacitors will be greatly impacted; aluminum capacitors will account for 1/3 of the entire capacitor industry, and its wide range of applications will still support consumer demand. At present, the aluminum capacitor industry is mainly concentrated in Japan, China, Taiwan, South Korea and other East Asian regions; the high-end capacitor industry is mostly monopolized by Japan. The top four global companies are in Japan: Chemi-Con, Rubycon, Nichicon, and Panasonic. It is expected that this earthquake will cause a huge gap between supply and demand in the short term, which will stimulate the rise in the prices of aluminum capacitor products, especially high-end products.

Mid-term: Japan is an important exporter of high-end capacitor materials - medium and high-pressure foils. While the reduction in production of its domestic aluminum capacitors offsets the need for some of the foils, overall, it will affect the supply of medium-high-pressure foils outside Japan. Since 2010, the international high-pressure foil has been in short supply. It is expected that this earthquake event will deepen the supply shortage in the field of medium and high-pressure chemical foils, thereby stimulating its price increase.

Long-term: This incident will accelerate the industrial transfer of the aluminum electrolytic capacitor industry. The core technology of aluminum capacitors, especially the production of medium and high pressure foils, is mainly concentrated in a few countries in Japan and Europe and the United States. However, due to the extremely high energy consumption of chemical foils (power consumption is about 70 degrees per square meter during the whole process), industrial transfer is a general trend. In recent years, China's industrial technology has improved rapidly, with lower manpower and energy costs, and has thus become the focus of global industrial transfer. At present, the world-renowned aluminum capacitor manufacturers have established production bases in China. Since 2005, China's aluminum electrolytic capacitor industry has completely relied on imports from the past, accounting for about 30% of the global market share by 2010, but the majority of low-end products, high-end products still need a lot of imports. At present, Japan is in a state of power shortage and severe power restriction, and its impact on the aluminum capacitor industry will be even more profound. Japan's earthquake is expected to accelerate the transfer of Japan's high-end aluminum capacitor industry to China.

Investment Advice:

We believe that this incident will directly benefit downstream manufacturers (especially high-end manufacturers) in the aluminum electrolytic capacitor industry in China, as well as upstream high-end electronic aluminum foil and chemical foil producers. It is recommended to pay attention to the leading high-end aluminum capacitor industry, Jianghai, and continue to recommend Dongfang Sunny Aluminum, a medium and high-pressure foil leader, and Xinjiang Xunhe, which is expected to expand its production capacity.