Each year at approximately this time I offer the readers of MarketEYE a synopsis of the preceding year and outlook for the coming year. This year is no exception.

January 2016
The prior year began with a drop in raw material feedstock prices, and this was brought about by expectations that the Chinese consumption of steel would not be as anticipated. This benefited base metal costs to produce passive components but also signified the expectation that Chinese consumption of all products, including electronic goods, would also be pushed back to lower forecast levels for the year. Precious metal prices also plunged last January, with palladium prices declining to a new low at the time of $488.00 per Troy ounce. These significant drops in pricing for last January in hindsight were significant signposts that the year’s performance would be lackluster. Also, last January, the lead times for capacitors, resistors and inductors showed almost no month-to-month movement, further indicating a stagnant market environment.

February 2016
Passive component vendors reported market conditions as being weak for the December 2015 quarter and forecasted that the March 2016 quarter would also be down. Currency valuations continued to negatively impact manufacturers reporting in U.S. dollars, and benefitting those reporting in yen. Vendors confirm that the only growth business segments were in wireless handsets, automotive and certain segments of the specialty electronics markets with emphasis upon medical and commercial aerospace. Defense remained stagnant and oil and gas was 50% down due to the idling of wells.

March 2016
The reader will note that lead times for tantalum capacitors continued to increase in March, with additional increases in lead times for specialty ceramic capacitors (high frequency, high voltage and high temperature, EDLC supercapacitors and axial leaded PET film capacitors). Evidence emerges that shifts in currency are erasing gains made in unit sales to the automotive segment and the wireless handset business creating a stagnant global business environment.

April 2016
One of the key highlights of April is that raw tantalite ore data shows prices spiking by 60% on a month-to-month basis, with price per pound for tantalite increasing from $55.00 per pound in March 2016 to $87 a pound in April 2016. Primary sources interviewed over the past ten days have revealed the following. Price increase in tantalum ore is due in part to the financial problems at Ningxia Non-Ferrous Metals and their operating entity, Orient Tantalum Ningxia Trading, which warned shareholders of a significant operating loss in the March 2016 quarter following a management shakeup earlier in the month. Primary sources suggest that customers have moved to a more “Just-In-Time” model instead of stockpiling ore and this has resulted in a price increase. Primary sources also agree that the volatility in price for ore is bad for the capacitor industry because customers dislike unusual aberrations. Such historical price fluctuations have proven bad for tantalum and palladium in the past and primary vendors in the supply chain feel that this is poor timing for a price spike, and it will further push customers toward alternative dielectrics.

May 2016
Western passive component manufacturers outperform in March 2016 quarterly revenues because of the strengthening of the yen to the U.S. dollar during the quarter.

In another surprise, a major MLCC vendor reported an 18.2% growth in MLCC sales for the March 2016 quarter following an 18.2% decline in the December 2015 quarter. Sales of small sized, high capacitance MLCC to a strategic handset customer (which is Samsung Electronics) normalized; and high reliability MLCC for auto and industrial use increased significantly.

June 2016
The “Brexit” vote in the UK to disengage from the EU will boost the UK legal economy as new contracts for all trade are written. However, as for the passive component industry, the impact is minimal because Pound Sterling manufacturing of electronic components is today almost non-existent with a few notable exceptions. IN terms of consumption- The UK represents about 7% of European consumption of passive components for FY 2016, compared to Germany’s 50%.

July 2016
While unit demand for capacitors remained elevated for many parts, we continued to see an increase in demand for ceramic and tantalum chip capacitors in July 2016, although there was a slowdown in demand for radial leaded film capacitors, overall demand in July and for the June 2016 quarter was healthy.

August 2016
Thick film chip resistors showed significant month-to-month increases and are following an uptick in demand just like capacitors. We note tightening supply and increased unit demand for the month of August with thin film chips, metal foil and nichrome increasing as well as thick film chip products.

September 2016
This month on the M&A side of the equation, Murata announced a “joint venture” with Shizuki Electric, who is the world’s largest producer of AC Power Film Capacitors for Home Appliances and HVAC Systems. Lead times for tantalum capacitors have been moving steadily upward from July through September and this is somewhat aerospace related (we believe). Lead times for all tantalum capacitors have been moving upward since February 2016, and we must caution our concern for the supply chain to manage any rapid increases in demand due a general global slowdown in tantalite ore production due to the very low price of the metal. Consolidation in this industry has been underway over the past five years as vendors weigh the benefits of profitability versus the challenges of working under extreme scrutiny.

October 2016
CAPACITOR LEAD TIMES continued their upward movement as demand for three of the primary dielectrics remained unchanged, but unit demand for ceramics uncharacteristically increased leading us to believe that capacity utilization rates for multilayered ceramic chip capacitors (MLCC) had finally pushed above 90% in volume globally, which would make sense given the extreme fluctuations in the dollar, yen and won over the past 12 months. The upward cycle in demand is in response to distributors preparing for the holiday buying season in the West in what is clearly a strong build season for wireless handsets and other consumer electronics related to the internet of things and increased global connectivity.

November 2016
The global passive component raw material index experienced a huge spike in November 2016 on a month-to-month basis with materials prices consumed in capacitors, resistors and inductors rising an incredible 12% in 30 days. All base metal pricing increased dramatically (by 12%) and so did precious metals (also up by 11.75% on a month-to-month basis in November 2016.

December 2016
TANTALUM CAPACITOR LEAD TIMES: The pressure remains on unit demand for tantalum capacitors, which we continue to understand is coming from the defense markets for satellites and missile defense (for overseas consumption). EXCHANGE RATES: So much continues to depend upon currency. In the September quarter the strengthening of the yen to the U.S. dollar brought yen valuations back into historical parity, however, the forecast for the December 2016 quarter is now up to 105 yen per USD which means the value of the yen is weakening to the U.S. dollar and will impact revenues again in the December 2016 quarter. Moreover we expect that the yen may weaken to 110 to 1 USD in the March quarter. The won also weakened against the U.S. dollar in October and November, while the NT$ remained largely unchanged.

January 2017
In January 2017 we noted a significant spike in lead times for large case size tantalum chip capacitors in the E/X Case and D Case size (large) molded chips. We also see the continued rise in lead times for MLCC and many types of resistors suggesting a real upward movement in demand as we enter 2017 as the first quarter usually sets the tone for the rest of the year. Tantalite raw materials remained unchanged in price, as did ruthenium, but it was forecasted that pricing for these metals would increase accordingly in the coming months because of their focused usage in electronic components.

2017 Calendar Year Outlook
All indications are that 2017 will be a growth year for the electronic components industry worldwide with greater content of parts per end-product, and a larger volume of end-products sold. Bright spots for the year continue to be in wireless handsets and automotive electronic subassemblies, but growth in medical electronics, space electronics and oil and gas electronics (later in the year) should prove exceptional. The true variable carried over from 2016 will be how fast and how often the U.S. dollar, euro, won, NT$ and ruan fluctuate with respect to the yen, and the global capacity for the world to produce MLCC, Tantalum Chip, Chip Resistor, Ferrite Bead, and SMD Coil without further capital investment.

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.

View other posts from Dennis M. Zogbi. View other posts from Dennis M. Zogbi.
搜索 MarketEYE
TTI Insights