The price of ruthenium metal jumped 68% between March and April 2017 as demand for thick film linear resistors, the primary consumer of the metal, increased to meet the rising needs of spooked consumers that have sent demand for almost all passive components upward for 2017. Resistors represent more than 90% of the global consumption volume for ruthenium metal (with some additional uses as a cracking catalyst, a hard disc drive coating and some esoteric chemical compounds) therefore, the metal is very sensitive to any changes in the global high-tech economy, and its signpost on the current market conditions should not be overlooked by the salient market analyst.

Ruthenium took a huge increase in price in April 2017 on a month-to-month basis growing from $40 to $67 per troy ounce because of its primary use as a resistive element. I estimate that this is because a deeper look at the PGM supply chain denotes the high percentage of ruthenium consumption in resistors than in any other single market.

Figure 1: Ruthenium Price Per Troy Ounce In US Dollars


Source: Paumanok Publications, Inc. The price of ruthenium jumped 68% between March 2017 and April 2017 as demand increased from the thick film chip resistor and the thick film resistor network and array markets worldwide. The price of ruthenium increased from $40.00 USD per Toz in March 2017 to $67 per Toz in April 2017.

Resistor Lead Times Reveal a Tightening Market

The current increase in resistor lead times began during the month of December 2016, when thin film chip resistor lead times began to stretch out. This was odd given that it was occurring in December, which is historically a slow month in component supply due to the holidays in the West. However, taken in context with an increase in demand for tantalum chip capacitors occurring at the same time, and primary sources revealing that demand was coming from defense end-use market segment. Also, the granular data of technology supports that a portion of the thin film chip resistor market is manufactured with tantalum nitride resistive element so there was also the added materials strain.

Then in January 2017, following a stretch in lead times for tantalum capacitors and ceramic chip capacitors causing buyers to believe they may not have enough parts for the June quarter, the entire resistor market turned on, with spikes in demand across the board for multiple types and sub-categories of resistors consumed in digital electronics. In April 2017 the pressure remains strong with almost all categories of resistor still increasing in lead times even though the sister components in capacitors have done an about face and began to settle back down.

Figure 2: Global Linear Resistor Lead Times by Month (January 2013 to April 2017)


Source: Paumanok Publications, Inc. Measured In Weeks

Thick Film Chip Resistor Demands Extends into Hyper-Drive

Thick film chip resistors showed a large scale increase in unit demand in January, February, March and again in April of 2017 which affected all case size from 0201 to 1206 and larger showing a significant increase in unit demand and extended lead times as a result. We believe that since a similar event happened in MLCC that this is related to buyer panic and is not rooted in reality – no real consumption.

Figure 3: Global Thick Film Chip Resistor Lead Times by Month (January 2013 to April 2017)


Source: Paumanok Publications, Inc. Industrial Market Research- Measured In Weeks

Resistor Networks Demonstrate Lead Time Pressures Too

Resistor network demand spiked in the beginning of 2017 as buyers began to panic and purchase more parts than they needed, fearing a lack of global capacity. This began in capacitors but has since spilled over into resistors, including resistor networks.

Figure 4: Global Resistor Network Lead Times by Month (January 2013 to April 2017)


Source: Paumanok Publications, Inc. Industrial Market Research- Measured In Weeks (Vertical Axis)

Wirewound and Foil Resistor Demand Spikes

There was another increase in demand for the power wirewound resistor in April 2017 for both power wirewound and metal foil resistors. Heavy pressure has been on the power wirewounds since November 2016. Both products are also used in defense electronics, especially the nichrome metal foil resistor. Therefore, because of the multiple pings of activity in specific segments we can determine that an unexpected upturn in defense demand for space applications caused the entire passive component industry to experience an upturn as customers in key end-use segments of communications, computer and consumer AV began to order more than they typically would. The reader should also understand that we do not see any real demand for these products, but we do see is a reluctance on the part of manufacturers to increase capacity in a market environment that supports a conclusion of a slowdown in unit demand for components due to penetration of handsets by global population and single digit declines in global consumption of computers.

Figure 5: Global Thick Film Chip Resistor Lead Times by Month (January 2013 to April 2017)


Source: Paumanok Publications, Inc. Industrial Market Research- Measured In Weeks (Vertical Axis)

Thin Film Resistor Chips Reach New Highs in Lead Time Extension

Lead times for thin film resistor chips spiked in April 2017 as demand, especially for the 0603 chip, skyrocketed. Pressure increased on all other thin film resistor case sizes as well. Thin film chip resistors are also used primarily in defense applications, but also in medical electronics and downhole pumping electronics. The spike in demand is a result of the general overall exuberance among customers to buy all things passive in the beginning of 2017 due to concerns over global capacity to produce specific parts.

Figure 6: Global Axial and Radial Leaded Resistor Lead Times by Month (January 2013 to April 2017)


Source: Paumanok Publications, Inc. Industrial Market Research- Measured In Weeks

Dennis M. Zogbi

Dennis M. Zogbi

Dennis M. Zogbi is the author of more than 260 market research reports on the worldwide electronic components industry. Specializing in capacitors, resistors, inductors and circuit protection component markets, technologies and opportunities; electronic materials including tantalum, ceramics, aluminum, plastics; palladium, ruthenium, nickel, copper, barium, titanium, activated carbon, and conductive polymers. Zogbi produces off-the-shelf market research reports through his wholly owned company, Paumanok Publications, Inc, as well as single client consulting, on-site presentations, due diligence for mergers and acquisitions, and he is the majority owner of Passive Component Industry Magazine LLC.

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