Electronic Material Demand Seems Hitting Bottom

Market demand for electronic materials seems hitting bottom. The users had increased their material inventories until mid 2010 when sales of home appliances and cars were strong. The users’ demand weakened after mid 2010 mainly in Japanese domestic market. Meanwhile, the demand maintains stable except for China. Some of electronic material makers, such as sputtering target material makers, are likely to return to full operations in early 2011.

Inventory adjustment of electronic materials continues for latest several months. For instance, electronic material sales were steady for liquid crystal panel TVs. However, panel inventory became excess in the market and ITO (indium-tin-oxide) makers have downed their productions by about 20%. ITO is main material for transparent electrode of liquid crystal panel. Japanese ITO makers say the demand is especially declining in Taiwan where panel makers are integrated.

Other electronic materials such as two-layer flexible substrate, leadframe or electrolytic copper foil have also entered adjustment phase. Domestic demand is especially weakening for eco friendly cars since Japanese government’s stimulus program ended.

Meanwhile, material makers are not seriously concerned on the market condition in future. Mr. Sadao Senda, chairperson of Japan Mining Industry Association, said very strong demand in the first half of fiscal 2010 (April-September 2010) was “overshoot” and the current inventory adjustment is just a rebound. Mr. Toshihiro Ofuji, board member of JX Nippon Mining & Metals, said the firm would return to full operation for ITO in or after January.

One rare metal trader in Tokyo says ITO makers recently show spot purchasing intention for indium though the makers have decreased their material procurement along the market slowdown. Sumitomo Metal Mining, a major supplier of two-layer flexible substrate, forecasts the sales could hit bottom in October-December 2010.