2014 a year of rich harvest for panel makers, stable market confidence supports strong demand in traditional slow season Q1 2015
According to the latest data by WitsView, MCI rose 256.2 points from 5115 points to 5371.2 points from November 10th to December 8th. The recent U.S. economic numbers are mostly positive. First, the Q3 GDP growth is revised up from 3.5% to 3.9%, while the Federal Reserve’s Beige Book shows climbing consumer spending due to the dropping oil prices, and the economic expansion continued in October and November. Besides, the PMI reading released by ISM came to 58.7 for the manufacturing sector and 59.3 for the non-manufacturing, both higher than expected, while the non-manufacturing number reached the three-month high. The strength in U.S. Dollar is also the market’s focus as the US Dollar Index rose to 89, the new high for the last 69 months. All indicators imply the optimistic outlook of the U.S. economy in Q4. On the other hand, the European economy faces contraction. ECB’s monetary policy meeting on December 4th had a conservative and pessimistic view on the economy as the policy makers held the interest rate unchanged and cut the inflation and GDP growth forecast. ECB’s highly-anticipated quantitative easing measure is still under evaluation and the decision will be made in the next quarter. The low crude oil price also determines the economic growth momentum in Europe as euro zone sees more difficulties to attain the inflation target, which is contrary to the recovery, despite of the cost cut.
China’s economic growth pace is under the spot light in the market. Chinese Academy of Social Science’s report has set the 2015 economic growth at 7%, while OECD’s outlook report indicates the nation’s average economic growth from 2015 to 2019 expectedly comes to 6.8%, and other institutions revise down the projection. The official growth target of 7.5% for 2014 seems challenging. People’s Bank of China lowered the interest rate at the end of November without warming, and such a “comprehensive” monetary easing measure is unprecedented. Once the policy tool is used, another interest rate cut is much more expected in 2015. Abenomics has recently caused plenty of doubts as the monetary easing makes no contribution to the inflation, the sales tax hike tempers the consumption, and the constantly lowering GDP growth surprises the market. Abe’s cabinet had delayed the 2nd sales tax increase and dissolved Parliament to call a snap election while the popularity remains high to seek the continuity of political power and economic policies. Overall, despite of the contraction in European and Japanese economies, the U.S. economy is supported, and China’s economic outlook will be the key to drive the market.
As Q4 comes to the end, the panel market gets better over the course of 2014 and makers enjoy a fruitful year. The monitor panel suppliers hold price-cutting clearance strategies amid the slow season and the year-end inventory settlement, while NB panels see declining prices because of slow season and Chinese panel makers’ output expansion. Despite of the softening prices of IT panels, the TV panel market has some good news. The TV panel demand was dragged down as the Chinese domestic demand was weak and no large-scale promotion campaign was held during Lunar New Year holidays. However, the two main TV brands Samsung and LGE continue to lift the inventory and massively support the TV panel makers as we enter the slow season. Based on WitsView’s latest panel price survey, most sizes of TV panels see flat or rising prices, especially 32”, 40”, 48”, and 50” seeing the most evident price increases. The TV panel application is likely to see ideal result in the slow season Q1’15.
However, the panel industry faces new challenges in 2015. The China-Korea FTA negotiation was completed last month, and the tariff on panels will drop to zero within ten years. The move is undoubtedly a new threat to Taiwanese and Japanese panel makers and prompt makers to seek options other than establishing plants in China to secure the footstep. Besides, three Gen8.5 fabs in China will get operational in Q2, which will potentially harm the market balance. The intense competition among panels makers in China, Japan, Taiwan, and Korea continues in 2015, and how TW and JP makers turn risks into their opportunities and ease the losses caused by the tariff barrier will be the key point to observe in the future.
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