GF Securities: The supply of looms and electronic yarn is double constraining this round of e-cloth price increases, and the price increase of electronic cloth continues to be strong
The Zhitong Finance App learned that GF Securities released a research report saying that currently the electronic cloth industry has almost zero inventory, there is a gap between supply and demand, and there is still plenty of room for price increases in the future. Ordinary electronic cloth continues to be booming, the volume and price of AI electronic cloth have risen sharply, and the upward trend in profit in the glass fiber industry from 2026-2028 is clear. This round of supply is characterized by strong constraints. AI demand injects strong growth momentum, and corporate profit elasticity is expected to exceed expectations.
The main views of GF Securities are as follows:
Since 25Q4, the shortage of ordinary electronic cloth has intensified, price increases have accelerated, and e-glass has entered a major cycle of price increases
Driven by AI demand and the shortage of looms, inventories in the electronic cloth industry have declined rapidly since 25Q4, and prices have continued to rise. According to Zhuochuang Information, prices of ordinary electronic cloth increased month by month in October/December 2025 and January-July 2026. The price increases for 7628 thick cloth were 0.2/0.2/0.5/0.5/0.5/0.7/1.2 yuan/meter, respectively, and thin cloth increased even more. Currently, the industry has almost zero inventory, there is a gap between supply and demand, and there is still plenty of room for price increases in the future.
It is expected that there will be a gap between the supply and demand of ordinary electronic cloth in 2026-2027
According to CCLA, the demand for electronic glass fiber cloth in China's copper clad plate industry is about 3.5 billion meters/year in 2024, and the demand for electronic glass fiber cloth is expected to grow to 3.7 billion meters in 2025. The bank estimates that under the pessimistic/neutral/optimistic situation in 2026, the demand for ordinary electronic cloth was 37.07/37.81/3.85 billion meters, respectively, and the supply and demand gaps were 0.39/113/187 million meters respectively. Under neutral expectations, there was a gap between the supply and demand of ordinary electronic cloth in 2026, and the gap widened further in 2027. The main reason is the supply side: AI and thin cloth have taken up little new production capacity for looms and electronic yarn; the demand side cannot be ignored: although demand for consumer electronics is weak, the overall demand for e-glass is growing better than expected. AI is driving demand for e-Glass, demand for new energy vehicles, charging piles, and energy storage is growing, and the thick and thin structure is also being optimized.
Supply is characterized by strong constraints. Supply constraints for looms and e-yarn will continue to exist in 2026-2028. At the same time, demand growth driven by AI will continue to be strong. It is expected that this round of e-yarn/cloth boom will continue for a long time
(1) The shortage of looms on the supply side is a core constraint. There is a gap in looms in 2026, and the gap is expected to expand in 2027. According to estimates, under the pessimistic/neutral/optimistic demand assumption, the total demand for new looms for AI electronic cloth and ordinary electronic cloth in 2026 is 2184/2608/3032, respectively. There is a gap between supply and demand in 2026-2027. Under neutral circumstances, the supply and demand gap for electronic fabric looms in 2026/2027 is 608/1050 units, respectively. The loom gap is mainly due to the rapid growth in AI demand. At the same time, the proportion of e-glass thin cloth is increasing, and AI electronic cloth and thin cloth are squeezing out looms. AI electronic cloth loom efficiency <e-glass thin cloth <e-glass thick cloth, AI electronic cloth demand and profit are better than thin cloth, and the industry shortage is transmitted from AI electronic cloth to thin cloth and thick cloth. (2) On the supply side, apart from the shortage of looms, there is little new production capacity for e-yarn, making e-yarn relatively tight. It is expected that e-yarn will face a tight supply trend in 2026-2028. According to Zhuochuang News and China's Jushi production line project construction announcement, it is expected that the net increase in actual production capacity from 2026-2028 will focus on asset characteristics, and peers will shift their focus to AI e-cloth. It is expected that the new supply of ordinary e-yarn will remain low in the future, lengthening the current boom cycle time.
Risk Alerts
There are risks such as low demand for electronic cloth, drastic expansion in production capacity of e-yarn and e-cloth looms, and rising raw fuel costs.