EL SEGUNDO, CA – Average pricing for PCBs is expected to decline until the third quarter of this year, in concert with declining costs for a key PCB raw material: copper, says iSuppli Corp.

In Asia, the primary market for PCB production and consumption, pricing for what iSuppli calls “a key product that indicates market trends” began to decrease in October. (The research firm did not identify the product.) Contract pricing for this PCB in the second quarter is expected to fall to 15.3 cents per sq. in., down 8.4% from last October. Pricing is expected to rebound slightly in the third quarter, rising 1.3% to 15.5 cents, and will remain at that level in the fourth quarter, says the research firm.

“Weak demand is negatively impacting PCB demand,” said Jason Ma, director and senior analyst, pricing and competitive analysis for iSuppli. “However, PCB pricing trends now are being dictated by copper costs.”

Ma notes the price of copper reached a peak level of $4.10 per lb. in the second quarter last year, and then began to drop, falling to $1.50 per lb. in February. This drop, combined with falling pricing for another key raw material, laminate, has helped PCB suppliers reduce costs.

PCB demand is expected to rise slightly in the third quarter, boosting pricing, Ma predicts.

Demand for PCBs has fallen significantly since the global economic crisis began. The major applications for PCBs are notebook PCs and consumer-oriented products such as mobile handsets and flat panel displays, all of which have slumped during the downturn.

Overcapacity has forced PCB fabricators to tighten their belts, while banks kept rigid control of their business loans. Moreover, the Chinese government is beginning the process of increasing its tax on corporate profits to 25% in 2012, up from 18% in 2008. China’s government also established environmental protection laws in 2008 that place new burdens on the PCB industry.

“This combination of factors is hurting PCB makers in China,” Ma noted. “Companies now must use their own [cash] to buy water recycling equipment, causing many small PCB factories to close. PCB suppliers have been forced to move their facilities to new locations like Vietnam or India.”