Market Trend

Between June 30, 2008 to July 11, 2008, the MCI index dropped sharply from 7337.4 to 6765.1, down by another 572.4 points. As mentioned in WitsView’s last MCI report, the 7000 level was the next benchmark to observe. Thus, with the index level now almost 300 points lower than the 7000 mark, it further confirms the current weak market fundamentals of the TFT LCD industry.

The last time the MCI index fell past 7000 occurred during Jul07~Sep07. However, the sudden plunge back then was due to the emerging subprime mortgage crisis. Thus, despite the fall, the TFT LCD market was still strong, as evidenced by the continued rising panel prices and strong end market demand. This time, aside from the external negative factors, the drops largely reflect weakening market conditions.

Given the latest drops, panel prices are expected to slip further for 2HJul. If the index continues to stay below the 7000 level or drops even further, the price pressure in August will persist. On the other hand, if the index returns above the 7000 level, it could mark a stabilization of prices for August. Needless to say, this will depend a great deal on the end market demand, and whether it will be strong enough to remove the current excess inventory and also consume the persisting panel output.

One other possibility is panel makers deciding to scale back their production. However, as mentioned in our top story analysis (20080703), the incentives to do so at this particular time point are not high.