Current Market Conditions

The Machining industry globally is somewhat fragmented with China currently holding the highest proportional market share of 17%. The growth rate with China, however, is expected to slow due to factors such as an imbalanced dependency, and increased risk, with Chinese suppliers and spiraling labor costs in China which are compelling buyers to look for low cost, domestic sourcing options.

We estimate APAC will see approximately 37% of the global market share for machining in Q2 2022, as the largest region for the industry.

 

 

With growing demand from end market sectors such as automotive and electrical, the market is expected to increase at a CAGR of 4-5% and forecasted to reach a value of $410 billion by 2023. 

 

 

The COVID-19 pandemic has been impactful economically across the world in many different markets and Machining has no immunity from this. The uncertainties that arose have led to a slowing of underlying growth in the Machining markets across the board.

The need for highly skilled labor has increased due to the technological advancements made within the industry. Unfortunately, supply and demand, in these new more advanced labor markets, is imbalanced causing an arrest in growth until equilibrium is restored.

Suppliers, especially high mix / low volume )are susceptible to commodity price fluctuations, against which it is difficult to hedge, due to their relatively lower volumes in raw material purchases. These are expected to impact margins and any final pricing of end products.

Due to the global shortage of semiconductors, most of machining equipment suppliers have increased their lead times to 6-12 months.

 

 

Recommendations on Ways to Mitigate Current Market Issues
(BOM Constraints, Allocation, Supply/Demand)

Provide long-term (1 year) forecasts to tier-1 suppliers. This will help secure raw materials and book capacity well in advance.

In some cases, customers with higher leverage, and purchasing power, in the electronics industry can offer support in supplying critical electronic components to machining equipment suppliers.

Investing in long-standing partnerships is of course key, but avoidance of sole sourcing reduces risk and offers optionality by introducing partners at the NPI technical qualification stage. This can offer suitable contingencies and a level of insulation through planning.

New Technology Entering the Market

In 2022, more conventional machines will be replaced by CNC technology to improve output and precision based on stringent requirements from end-users.

We see a continuance of emerging trends in Robotic Machining, Additive Manufacturing and in IoT:

• Robotic Machining
  • Milling, turning, drilling, grinding and cutting are some of the key techniques, used by CNC or conventional machines, to perform the machining process. However, the increased adoption of robotic machining in the sector, where robots are used to perform various, software driven, high precision processes, will cause a shift away from these more conventional techniques.
  • Advantages are flexibility in tool positioning, the ability to carry out machining operations in 3,4,5 or 6 axes, improved process efficiency, increased product quality, mitigation of human error and lower resource consumption.
  • Challenges are high capital expenditures, the requirements of a skilled workforce, a large floor space consumption and the requirements for regular and planned maintenance programs.
  • The technology is used in Automotive (engines, truck frames, body panels, etc.), Aerospace (turbine blades, wing segments, bulkheads in aircraft fuselage), Woodworking (furniture, banisters, die and molds).
  • Major players are ABB Group, Kuka, Fanuc America Corporation and Yaskawa Motoman.
• Additive Manufacturing (3D Printing)
  • Additive manufacturing is a technique where a product or prototype is created using layer by layer deposition of a core material. The material can be plastic, metal and most recently even food and human tissue.
  • Advantages are the reduction of lead times, and waste, and the ability to manufacture more complex structures, and with greater accuracy and precision.
  • Challenges are limitation in the size of materials, costs compared with conventional techniques,  and producing routinely at scale.
  • The prominent manufacturing techniques are Selective Laser Sintering (SLS), Fused Deposition Modeling (FDM), Binder Jetting Techniques (BJT), Laminated Object Manufacturing (LOM), Stereo Lithography Apparatus (SLA).
  • Major machine manufacturers include Stratasys Ltd., Renishaw, EOS, 3D Systems, Ultimaker.
• Internet of Things
  • IoT is a network of connected systems, where various physical objects are connected to each other with the help of embedded technologies. These physical objects communicate with each other where they sense data, act, and allow real-time monitoring of various data types.
  • Advantages are real-time monitoring, predictive maintenance, process optimization, instantaneous control and response in complex autonomous systems.
  • Challenges are initial costs and talent availability to skilled talent capable of managing data across various platforms.
  • Major players include SAP, Cisco, GE, and ARM.

Raw Material Price Trends

The cost of fabricated metals (Aluminum, Stainless steel 304) can average around 30% of equipment cost structures. The price of fabricated metal products is projected to grow at an annualized rate of 1.1% by 2024 on the back of growing demand. Growth drivers will put upward pressure on supplier’s costs, before offsetting efficiency programs, and could drive downstream price increases.

The cost of semiconductors average around 11% of equipment cost structures. The upstream supply chain including wafer fabs, packaging, and testing facilities have pushed significant price increases to semiconductor suppliers o ensure stable supply and to meet customer demand. This subsequently impacted component pricing. We foresee this continuing through the remainder of 2022. Suppliers have strong backlogs, and many are quoting book to bill ratios of more than 1.5:1. Key players such as STM, Renesas, Analog Devices, TI, MPS, Microchip have increased pricing by 10-15% from Q1 2022.

Machining Cost Structure and Cost Improvement Recommendations

Based on the current market conditions, we recommend the following cost savings recommendations to buyers:

• Volume-based contracts – material planning, optimization, coordination between multiple sites, adjust site to contracted/centralized sourcing.
• Supply Base Consolidation – consolidate the supply base to achieve volume consolidation, better spend visibility and negotiation leverage.
• Cost Avoidance – elimination of the processes not adding value through continuous business process improvements.
• Incentives Programs – bulk procurement incentives.

Current Market Condition and Trends

The Automation industry continues to evolve and grow organically. The Process Automation global market size was $115.9 billion (2021), with global CAGR of 6.12% between (2021 - 2025). The North American, European and APAC regions remain the 3 key markets.

The industry has been revolutionized by the combination of the digital and physical aspects of manufacturing, aimed at delivering optimum performance. Furthermore, the focus on achieving zero waste production and shorter time to market has fueled the growth in this market.

Global supply chain constraints and COVID-19 impacts continue to be keenly felt. Key components and associated lead times have stretched from 2 months to 6 months (Robot, IPC, Motor, Sensor etc). Prices are trending upwards due to raw materials, steel and copper, commodity price increases, global inflationary pressures, IC cost and availability, electronics components shortages and increased logistics costs.

 

Source: Bereo Inc.

 

Commodity Market Fluctuations

Global inflationary pressure continues to significantly push up metal pricing with both steel and copper seeing increases in excess of 20% in the past 12 months.

Raw material price increases have inevitably been passed to downstream supply chains, which are evident in proposals and pricing data.

Strategic Supplier partnerships, as discussed in a previous edition, are always critical but especially so in volatile market conditions where the need to share cost increases and mitigate supply chain disruption risks is most exaggerated.

 

Source: London Metal Exchange

 

Industrial Robotics

The annual revenues in the global robotics industry is now approx $50 billion, encompassing robot systems, software & peripherals. The CAGR on new industrial robot installations, between 2015 -2020, is around 9% and continues to grow

The most recent data from 2020 quotes operational stock of industrial robots at >3m units, an increase of 10% on the previous year. More than three quarters of robot installations globally can be accounted for in only five countries i.e. China, Japan, United States, South Korea and Germany and nothing is expected near term to materially impact this.

Despite the challenges introduced by the emergence and longevity of COVID, robotic installations grew slightly to > 383k units in 2020. This represents a growth rate of almost 0.5% and makes 2020 the third most successful year for the robotics industry to date, following 2018 and 2017. The 10% drop in installations in 2019 reflected several market headwinds including the trade conflict between China and the United States.

 

Source: International Federation of Robotics

 

Industrial Robotics

Outlook: 2021 – 2024

2021 is best characterized by the recovery from the COVID-19 pandemic. Global robot installations rebounded strongly and saw high level of growth in 2021 and exceeded performance in previous years volumes.

Robot installations in North America, Asia and Europe all saw tangible increases in volumes and compared extremely favorably with prior years. Increases ranged between 8% and 15% regionally resulting in a strong overall demand and performance in the year.

The “boom after crisis” is expected to fade subside in 2022 globally. From 2021 to 2024, average annual growth rates in the medium single-digit range are more expected. The mark of 500,000 units installed per year worldwide is expected to be reached in 2024. The North American market is expected to grow a little bit stronger by 10% on average each year. Growth expectations for the European market are a little bit lower in the low single-digit range. Central and Eastern Europe are expected to perform stronger than Western Europe. The Asian market will continue to remain strong.

 

Source: International Federation of Robotics

 

Industrial Robotics

Supply trends and insights

FANUC, Yaskawa, ABB, Kawasaki, Nachi and Kuka currently dominate the global industrial robotic market in both industrial and collaborative robot product offerings.

Suppliers are consistently investing in innovation to fuel the growth of Industrial Robotic adoption in typically competitive markets. Improvements in product capabilities and in technology enhancements result in improved product offerings being available to buyers, best evidenced by collaborative robots, IOT, AI and RAAS models.

We see an increase in M&A activities as the robotics industry players focus on M&A to expand their reach to untapped global market and increase their product and service portfolios in the fields of robotics and enhanced system integration capabilities.

 

Source: Bereo Inc.

 

Industrial Robotics

Increasing robot installations in the electrical/electronics industry

The electrical/electronics industry became the main customer of industrial robots in 2020. 109,315 robots were installed in the production of household appliances, electrical machinery, semiconductors, solar panels, computers, telecommunication devices, and video and electronic entertainment goods. That is 23% more than the previous year and the second-highest level ever recorded, following the peak level of 121,955 units in 2017. Since 2015, robot demand from this industry had grown by 11% per year on average. In 2018 and 2019, global demand for electronic devices and components decreased substantially. This customer industry was among the most affected businesses that suffered from the China-US trade conflict as Asian countries are leaders in the manufacturing of electronic products and components. However, demand for consumer electronics skyrocketed during the COVID-19 pandemic and electronic components are crucial components in all kinds of engineering, including automotive and industrial machinery. The limited production capacity and the disruptions in supply chains from the pandemic have demonstrated the need for additional production capacity in the electronics industry.

2020 created a historic moment in the history of robotics

The automotive industry lost its position as the largest customer of industrial robots as only 79,849 units (-22%) were installed. This was almost 29,500 fewer units than the electronics industry received. The automotive industry had been the most important customer of industrial robots since the first-ever commercially sold unit was installed at the General Motors plant in New Jersey in 1961. In 2017, the electronics industry came close but remained 1,500 units shy of the automotive industry. In 2018, installations in the electronics industry declined, while those in the automotive industry reached a new peak level of 125,581 units, building a gap of 20,000 units to the electronics industry. This gap remained large, some 13,000 units in 2019, when robot demand in both industries declined. The pandemic forced many automotive suppliers and car manufacturers to cease production temporarily, as global supply chains were disrupted. Upstream products (inputs) were unavailable, and outputs could not be delivered because of closed borders and other restrictions. The global production of cars and commercial vehicles dropped by 16% in 2020.

 

Source: International Federation of Robotics

AMERICAS, CANADA & MEXICO REGIONS

• Space Demand Breaks 5-Year Record Net - absorption across the region is the highest it’s been on record, at 521.3 million sq. ft., outstripping supply by 200.8 million sq. ft. This drove the average vacancy rate down to 2.7% as of Q4 2021. Supply is struggling to keep up with demand – construction deliveries in the Americas dropped by 5.6% year-over-year.
• Sharp Rise in Rents - the average asking rent in the US increased by 1.9% quarter-over-quarter and 11% year-over-year to a record $9.10 per sq. ft. Canada and Mexico saw rents rise year-over-year by 10.9% and 4.4%, respectively. Rental rate growth is expected to stay in the double digits in the US well into 2023.
• Investors Still Very Bullish - domestic and foreign capital continues to seek investment opportunities in the high-performing sectors, driving cap rates to historic lows. Investors are now looking at class B space as well as secondary and tertiary markets. Robust demand led to transaction volume increasing 59.5% year-over-year in 2021 to $178.7 billion, another record.

APAC REGION

• Leasing Momentum Continued to be Strong - logistics occupiers remained in expansion mode in Q4 2021 on the back of holiday season stockpiling and demand for safety inventory to mitigate supply chain disruption. In addition to robust expansionary demand, CBRE anticipates a rise in flight to quality requirements as more occupiers seek modern logistics facilities to enhance operational efficiency and install automation and other logistics technology.
• Availability Further Tightened Overall - availability further tightened across major markets with the exception of selected China tier-I cities. Shanghai and Guangzhou both recorded higher vacancy rates after seeing the addition of around 70% of their annual pipeline during this quarter. While the addition of new stock will exert short-term pressure on occupancy in 2022, any negative impact will be limited due to current low availability and the unevenly distributed development pipeline.
• Logistics Remains Sought-after by Investors - industrial assets remained keenly sought after in 2021, with full-year investment volume increasing by 58% year over year to US$33 billion. Logistics assets will remain keenly sought after, with 36% of Asia Pacific investors identified as the most preferred sector in 2022. While yield compression is expected to continue in 2022, the pace will be milder as investors adopt a more cautious stance towards the outlook for leasing demand and the future supply pipeline.

EMEA REGION

• Record High Take-up and Record Low Vacancy - in EMEA, the sector take-up increased 24.6% in 2021 compared with the previous year. The new record level of 33.3m sqm shows the strength of the occupier demand and has drastically decreased the vacancy rate by more than 100bps to the current average of 3.03% stimulated record high annual rental growth.
• The demand and supply imbalance and the hindered supply response due to land scarcity has triggered the highest annual average rental growth in Europe (7.4%). Rents are still far from stabilized, and we forecast the strong levels of rental growth to keep ongoing at least for the next few years.
• Completions Continued to Struggle to Keep Pace - despite the increasing demand, the rate of annual completions (stock increase velocity) has remained stable compared to 2020 at around 6% of the total stock figure. The reason for that is the lack of fully consented land and the protracted planning permission processes in most European countries.

 

Current Market Situation

• What are the key projections for Surface Mount Technology (SMT) Industry through 2026?
  • Rising demand of Surface Mount Technology (SMT) and increased investment in Consumer Electronics, Automotive, Aerospace and Defense are driving the global Surface Mount Technology (SMT) market in 2022 and beyond. Our latest intelligence suggest that growth of the SMT market will change very significantly from previous years. Over the next five years, the SMT market will enjoy a enjoy substantial increases in compounded growth rates. In forward looking estimates 2021 has been considered as a baseline and 2022 to 2026 as the forecast period under observation to estimates on SMT Total Available Market (TAM) size.
• The Impact of COVID-19 on the global Surface Mount Technology (SMT) market
• COVID-19 outbreaks have led to the implementation of stringent lockdown regulations across several nations resulting in disruptions in import and export activities of Surface Mount Technology (SMT).
  • https://www.marketwatch.com/press-release/surface-mount-technology-smt-market-size-in-2022-with-top-countries-data-what-are-the-key-projections-for-surface-mount-technology-smt-industry-through-2026-latest-116-pages-report-2021-12-29
• What is the estimated value of the Global Market for Surface Mount Technology (SMT) Equipment?
  • The Global Market for Surface Mount Technology (SMT) Equipment was estimated to be valued at $3.7 billion YTD.
• What is the growth rate of the Global Market for Surface Mount Technology (SMT) Equipment?
  • The growth rate of the Global Market for Surface Mount Technology (SMT) Equipment is 5.8%
• What is the forecasted size of the Global Market for Surface Mount Technology (SMT) Equipment?
  • The Global Market for Surface Mount Technology (SMT) Equipment is estimated to be worth $5.5 Billion by 2026.
  • https://www.researchandmarkets.com/reports/1946765/surface_mount_technology_smt_equipment_global

Analysis Of Surface Mount Technology (SMT) Market In 2022

The market in North America is expected to grow considerably during the forecast period. The high adoption of advanced technology and the presence of large players in this region are likely to create ample growth opportunities for the market. The market in North America is expected to hold the largest market share, whereas the APAC region is projected to provide significant opportunities in this market and is expected to grow at the highest CAGR during the forecast period. https://www.researchandmarkets.com/reports/1946765/surface_mount_technology_smt_equipment_global

Surface Mount Technology (SMT) Equipment - Global Market Trajectory & Analytics

The global market for Surface Mount Technology (SMT) Equipment is projected to reach US $5.5bn over the next few years. The growth is driven by technological innovations in next generation electronics, rising demand for mobile communication devices, need for speed and flexibility in electronics manufacturing, and the absolute rise in the number of electronic contract manufacturers. In the current age of electronics and digital revolution, chip architecture, production, design, and packaging technologies remain important and lucrative. A host of factors are driving opportunities in key end-use industries with the most important of them being rise of smartphones as unified communication tools; ubiquitous use of radios, pagers, GPS instruments and Bluetooth devices; age of wireless networking; omnipresence of laptops/Ultrabooks; growing base of connected devices; industrial automation and smart factory; integration of electronics in implants, surgical devices and diagnostic equipment; rise of telemedicine and robotic surgeries; commercialization of smart, connected, and autonomous cars; development of Fly-By-Wire aircraft; and consumer IoT and emerging concept of smart connected appliances/homes.

Other major factors driving growth include stable R&D investments in electronics packaging and chip design and architecture; continued focus on miniaturization of electronic components; and increased adoption of automation technologies for more efficient assembling and packaging of electronic sub-systems. Growing competition and the urgent need to increase manufacturing throughput and reduce time-to-market is helping drive strong adoption of advanced and highly efficient ‘pick & place' machines. A few of the benefits offered by SMT machines include detection of defects, lower risk of production re-runs, improved quality control and reduced board and material handling costs perfectly suited for electronics assembly and packaging. Asia-Pacific represents the largest and the fastest growing market worldwide with a CAGR of 8.2% over the analysis period, led by booming electronics contract manufacturing sector in Southeast Asia countries; emergence of Taiwan and South Korea as hubs for semiconductor production, innovation and excellence; and strong domestic demand for electronic products and solutions. https://www.transparencymarketresearch.com/smt-equipment-market.html

Software Technologies Leverage SMT Lines in Rapid Decision-Making during Coronavirus Crisis

Most manufacturers are facing unprecedented challenges amidst the ongoing coronavirus crisis. However, as  we know “necessity is the mother of invention” and these challenges have created opportunities to emerge stronger and more resilient. To this end, Arch Systems— a specialist in advanced data analytics and predictive tools, is harnessing the power and functionality of SMT lines with the use of remote software platforms. The COVID-19 pandemic has led to increased adoption of SMT lines with smart machines and peripherals, which has causally aided in the economic recovery of the global SMT equipment market.

Software and semiconductor companies have joined forces to fight the COVID-19 outbreak. Remote manufacturing of medical devices, ventilators, and other critical equipment is a fast-growing phenomenon in the SMT equipment market. Manufacturers handling SMT lines are gravitating toward software technologies to acquire insights from global KPI (Key Performance Indicators) dashboards.

Relaxation of Complex Indian Taxation Policies Help Electronics Sector Reach Full Potential

The SMT equipment market is slated to surpass the valuation of US $9.8B by the end of 2030. Manufacturers are unlocking growth opportunities in India’s booming electronics sector. As the Indian Government is laying the foundation to attract global MNCs (Multinational Corporations), there is an urgent demand to leverage the SMT segment. Companies in the India and global SMT equipment market are capitalizing on this opportunity to introduce robust technologies to help Indian electronics manufacturing reach its full potential. As such, the Indian Government is working on several export-oriented policies that will further reduce the complex taxation policies within the nation.

 

 

Innovations in the PCB assembly for modern medical equipment are experiencing a paradigm shift due to the ever-growing needs of consumers in the SMT equipment market. Robust PCB assemblies are being used to develop functional medical equipment. Rapid modernization in technology is replacing traditional monitoring systems with tablets, smartphones, iPads, and software to ensure better recording. Prominent applications of medical PCBs involve the development of pacemakers, MRI (Magnetic Resonance Imaging), and body temperature monitoring devices.

Smart Factories Improving Bottom Lines for Stakeholders in Automotive Sector

The concept of smart manufacturing is gaining popularity in the SMT equipment market. The proliferation of automation and robotics in every possible end market is creating business opportunities for semiconductor companies in the SMT equipment market. This is being achieved with increased availability of SMT equipment in smart manufacturing sectors and committed strategic investments in “smart factories” philosophies that drive bottom-line improvements in consumer electronics, telecommunications and automotive sectors, amongst others.

We expect the reopening of electronics and automotive industries in China is to re-invigorate growth in the global SMT equipment market post-pandemic. Next-gen innovations in PCB assemblies for modern medical devices such as pressure monitors, infusion fluid control devices, and CT (Computed Tomography) scanning devices are creating stable revenue streams for manufacturers and suppliers. Although SMT parts give better signal performance, technicians and designers are opting for PTH parts in high-power applications. Hence, semiconductor companies should educate clients about several parameters such as power, performance, and potential rework associated with SMT and PTH parts to better design devices.

SMT Equipment Market: Overview

According to Transparency Market Research’s latest report on the global SMT equipment market for the period between 2017–2018 and the forecast period 2020–2030, low maintenance design offering longer service life, rise in demand for PCBs in the consumer electronics sector and demand from medical and defense fields are factors expected to boost the global SMT equipment market during the forecast period.

In terms of revenue, the global SMT equipment market is estimated to surpass USD $9.8B by 2030, expanding at a CAGR of 4.5% during the forecast period.

Low Maintenance Design Offers Longer Service Life: A Key Driver

Growing usage of flex circuit in wearable electronics across various sectors, especially in smartphone and smart card industries, is the primary factor predicted to foster demand and innovation in the surface mount technology (SMT) market during the forecast period from 2020 to 2030.

Flex circuit is also increasingly being used across various automotive, medical, and telecommunication end-use industries, as it offers better form factor, along with being a replacement to traditional wire harnesses, improves signal quality, reduces wiring errors, and offers improved electrical performance of electronic components

In addition, the current trend of miniaturization of devices with superior performance and lower cost of configuration is also anticipated to boost the demand for flex printed circuit. Various electronics manufacturing companies in different regions, especially in India, China, and Indonesia, among others, are witnessing significant growth due to rise spending on technologically advanced SMT equipment.

The Asia Pacific region comprises major emerging markets in SMT equipment. China, India, Taiwan, and Japan are leading contributors to the market in the region. Considering these factors, demand for SMT equipment is expected to become high during the forecast period. This driver is anticipated to have a high impact on the global SMT equipment market during the forecast period.

Rise in Price-based Competition Hindering Growth of SMT Equipment Market

The surface mount technology equipment market witnesses’ intense price-based competition. Local players in developing countries are penetrating the markets in developed countries by providing affordable and efficient SMT equipment.

As a result, international players are reducing the price of their SMT equipment products in order to sustain in the global surface mount technology equipment market.

The bottom-line growth of companies is expected to stagnate in the near future, due to such intensive price-based competition despite continuing top line growth at an individual level. This, in turn, is expected to negatively influence the expansion of the SMT equipment market globally.

SMT Equipment Market: Provider Landscape

Detailed profiles of providers of SMT equipment have been provided in the report to evaluate their financials, key product offerings, recent developments, and strategies.

Key players operating in the global SMT equipment market are:

• Cyberoptics Corporation
• Nordson Corporation
• ASM Assembly Systems GmbH & Co.KG
• Mycronic AB
• Viscom AG
• Fuji Machine Manufacturing Co., Ltd.
• Hitachi High-Technologies Corporation
• Juki Corporation

SMT Equipment Market: Key Developments

Key providers of SMT equipment, such as Fuji Machine Manufacturing Co., Ltd., Hitachi High-Technologies Corporation, Juki Corporation, and Orbotech Ltd. are focusing on the construction of cost-effective SMT equipment to attract more customers and launch various products.

Some other key developments in the global SMT equipment market are highlighted below:

• In January 2019, Mycronic AB launched a smart MYPro Line assembly solution that has the ability to achieve more flexible and profitable electronics production with a complete SMT assembly line solution designed for smart factory connectivity.
• In December 2016, Juki Corporation launched a new high-speed Smart Modular Mounter, model RS-1, and expanded its SMT equipment product line.

In the global SMT equipment market report, we have discussed individual strategies, followed by company profiles of providers of SMT equipment systems. The ‘Competition Landscape’ section has been included in the report to provide readers with a dashboard view and company market share analysis of key players operating in the global SMT equipment market.

SCOOP Predictions – Phil Stoten

• Most companies dialogue feedback that we need to maximize with the regionalization & progress with customers in this respect.
• Smart buyer trying to negotiate with 90 days/leasing extend payment terms due to long lead times.
• Cash flow is king.
• M&A activities will further increase.
• Recruiting key talents will be a challenge.
• Companies will face increase revenue and ensure backlog fulfill ASAP.

New Trends - entering the market

• The industrial internet of things (iOT). Data can be used to enhance the manufacturing process. Data gathered from sensors on factory machines can help manufactures to understand machines performance, optimize the maintenance process & reduce machine downtime, and even predict when things will go wrong.
• 5G & Edge Computing – 5th generation of mobile data network.
• Predictive maintenance –  use sensor data AI to detect failure patterns & maintain equipment effectively.
• Digital twins – Can be a technology used to visualize and simulate the entire supply chain.
• Automation & Dark factories.
• Intelligent Robot & Cobots (speciality design to work).
• 3D printing.

 

SMT/CapEx Category

• Automotive sector – trending to EV plus charging stations, so, increase in electronics content in the auto industry. Tesla is key customer to collaborate closely.
• IC component price increased due to demand/supply/strategy allocation.
• CapEx asset surplus utilization enforcement, retooling strategy, CapEx leasing - depreciation extended, defer payment.
• We need to develop preferred partners for Factory of the Future and determine the allocation by customer sector.
• Alternative Regional development – self-sustain.

Cost Savings Recommendation/New Strategy Proposal

Procurement organizations should look to adopt a strategic sourcing model to support execution to core KPI’s such as Cost Avoidance/Reduction. Key considerations to include in the sourcing strategy include:

• Develop regional preferred supplier network for those categories that require localized expertise or support. Nearshoring OEMs and Distributors provide logistics control if another geopolitical crisis arises.
• Implement SMT Equipment standardized configurations. This will allow for:
  • The ability to redeploy idle equipment to improve asset utilization rates.
  • The prevention of “custom” configured gear limiting the ability for procurement organizations to control costs.
  • Improvement of inventory management of spare parts.
• Organizations with Advanced Manufacturing or SMT Engineering teams should look to develop a primary and secondary source, at a minimum, to help ensure continuity of supply and supplier competition improving operational and commercial performance, respectively.
• Develop a forecast to provide key suppliers that outlines the next 6-12 months of demand. Especially in today’s environment, having a line ahead at all times is critical to meet customer demand and NPI expansion.

 

 

Calculating the benefits generated by procurement organizations can be a challenging task. Some organizations will look at simply the cost savings or avoidance generated from the negotiation with the supplier. While other more mature organizations will also take into consideration:

• Expense avoidance/reduction.
• Cost avoidance/reduction.
• Supplier Performance Management (SPM) metrics including improved BOM costs through proactive value engineering.
• Asset utilization management programs can help companies in extracting the hidden value of unutilized or underutilized equipment and hence avoid the expense of purchasing new equipment or reduce the load on existing equipment, thus increasing its useful life.
• Equipment energy consumption. As equipment design advances so does the performance around energy consumption reducing the site’s carbon footprint. Preventive maintenance cycles increase the uptime of equipment and hence affect productivity.

The Russian Invasion of Ukraine

Early in 2022, after the Chinese New Year, there were cautious whispers that we might see supply chains normalized. But the Russian invasion of Ukraine has changed all that – especially in Europe. Ukraine is known as the ‘breadbasket of Europe’, but manufacturing is also likely to take a hard hit. Many areas of global supply chains will be negatively affected by the conflict—some immediately, but most will only become apparent in the long term.

Neon For Semiconductor Chips

The global semiconductor chip shortage is old news, but the conflict in Ukraine might cause extra disruptions and affect supply—further constraining tech and car companies. Ukraine and Russia are vital sources of neon gas, which is an essential element to manufacture semiconductor chips as it is used in the lithography processes for chip production. It has been reported that the vast majority of the  U.S. neon supply comes from Ukraine and Russia. Neon gas is a byproduct of steel manufacturing in Russia, where up to half the world’s semiconductor-grade neon is produced. The gas is then sent to Ukraine, where it is purified. However, the current war is likely to have serious ramifications on business links between the two countries. In 2014, when Russia annexed Crimea, the price of neon increased by up to 600% as a result of the trouble. While Russia is not the only large-scale steel manufacturer that produces neon, extraction of the element cannot be set up anywhere at will. Neon capture requires specialized infrastructure, and steel plants must be shut down for the technology to be retrofitted.

If it is true that many companies have stockpiles of neon, there is no immediate risk of supply chain disruption. However, the longer the war continues, the more serious the problem will become. The crisis is, once again, reminding the world how manufacturers’ overreliance on a particular area can be dangerous. To make matters worse, the second-largest producer of neon is China, which compounds the problem due to recent US sanctions on the Chinese semiconductor chip-making industry.

The situation is most likely to affect smaller manufacturers first; and there is a serious possibility that, in the mid-term, the conflict has the potential to create further disruption for the strained global supply chain.

Metals Used in Electronic Manufacturing

Russia supplies approximately 37% of the world’s palladium. The metal is used in catalytic converters by the automotive industry, in sensor chips, and in certain types of computing memory. On the day the war began, the price of palladium increased by 7%. Russia also controls about 10% of global copper reserves, used widely in electronics manufacturing. It is also a major producer of platinum and nickel, which is used extensively in electric vehicle batteries.

If the conflict continues for a prolonged period, there will most likely be delays in shipping, and prices will probably increase. Manufacturers will also look to suppliers of metals used in electronics manufacturing from other countries, palladium from South Africa, for example. However, despite the impending woes, because of the pandemic, manufacturers have taken a more preventative approach by stockpiling raw materials and diversifying their supply.

German Reliance on Natural Gas From Russia

Germany, at the heart of Europe’s manufacturing industry, currently obtains more than half of its gas from Russia’s Gazprom—and demand is increasing as the country is phasing out electricity from nuclear and coal. The manufacturing sector in Germany, the world’s fourth-largest economy, contributes to roughly a quarter of its GDP—much more than other European countries. Top exports from Germany include vehicles, machinery, electronic products, and electrical equipment. It is safe to say that Germany relies heavily on Russian gas.

However, the day before the Russian invasion, Germany took the extreme measure of halting certification of the Nord Stream 2 natural gas pipeline. The pipeline planned to double the amount of gas sent from Russia to Europe. While the Russian retaliation for Germany’s decision is still unknown, anything involving restricting the flow of gas has the potential to hit manufacturing hard.

Although there are not likely to be any short-term effects, thanks to the end of winter drawing near, there is serious concern about next winter. Germany would have to give domestic heating priority, which means manufacturers might have to decrease output. The result would probably be an outpouring of manufacturing to other areas of the globe, which could—we’ve been here before—wreak havoc to supply chains. Despite Germany’s aspirations to power its manufacturing sector solely on renewable energies from 2045, it is a long way off from being able to achieve this.

Ocean Shipping Has Already Been Affected

The previous three consequences of the invasion are more likely to have mid- to-long-term effects. However, the most immediate supply chain-related problem has been ocean shipping. The Port of Odessa (UAODS), an important Black Sea port, is currently closed due to the fighting, which means that vital shipping lanes are affected. Maersk, for example, the world’s second-largest container shipping line and vessel operator, has announced that no freight will travel to or from Ukraine until further notice.

The shipping titan, in an interview with Logistics Management, stated that land and air freight routes with Russia are currently operational; however, this could potentially change as the situation unfolds. Other supply chain management services, including UPS, FedEx, and TNT have also suspended services to either Ukraine or Russia. The invasion has already affected the flow of goods and trade, and the situation is being compounded by the economic sanctions, which have led to market volatility and production capacity being affected along certain logistics routes.

Conclusion

On a human level, the best option the world can hope for is a ceasefire. This, however, is unlikely to help supply chains. Industries such as high-tech electronics and semiconductors, and rare earth minerals are highly susceptible to unpredictability. The most probable outcome of the conflict, if it is resolved promptly, is that there will be some supply chain upheaval later on this year.

In a worst-case scenario, if the war is prolonged, supply chains will come under serious pressure in the following six areas:

1.  Constraints for logistics routes and capacity

2.  Demand volatility

3.  Material shortages (particularly hydrocarbons, critical minerals, and metals)

4.  Material cost increases

5.  Impacts on production capacity

6.  Cybersecurity breaches

Supply chain operators have learned a great deal over the past two years; they have become adept at handling crises and more resilient. Now they must forecast different scenarios and assess potential weaknesses in their systems to start working on contingencies.

Russian Invasion Of Ukraine Could Have An Impact On The Semiconductor Industry Globally

 

 

The semiconductor shortage, that was expected to ease by mid-2022, is likely to get worse. As Russia and Ukraine are both suppliers of components used in semiconductor manufacturing, Russia’s invasion of Ukraine will further stress the industry globally -- and fears are that it can result in manufacturing constraints leading to supply shortages and semiconductor price hikes.

“Just like Taiwan, both Ukraine and Russia also play a pivotal role in the global semiconductor supply chains. Ukraine is a significantly important source and supplier of raw materials, including, for instance, semiconductor-grade neon used in semiconductor manufacturing. Similarly, Russia is a key source of palladium used in many memory and sensor chips. In fact, it accounts for 45 per cent of the global supply. As such, the trickle-down effect of the war could potentially impact chip capacity and consequently, spike chip prices,” Prabhu Ram, Head - Industry Intelligence Group, CyberMedia Research told Business Today.

Semiconductors, that power everything electronic on earth and in space, has a complex ecosystem of chip manufacturing. And chip manufacturing is a difficult and complex process. The global semiconductor industry is interdependent, and no nation in the world has managed to master the ecosystem yet.

Industry experts explain, companies like Taiwan’s TSMC, China’s SMIC or South Korean Samsung Semiconductor Inc. are the contract chipmakers that share wafer specifications with fabless companies and IDMs, post which these companies send their design IPs to be printed on the wafers.

Wafers are then turned into semiconductors using high-precision processes and machinery sourced from companies such as Netherland-based ASML, Japan-based Tokyo Electron and Applied Materials of the US. When it comes to components, Russia is the leading producer of palladium. Palladium is essential for memory and sensor chips. It also produces several other key raw materials for computer chips, including the rare–earth metal, scandium.

On the other hand, Ukraine is a leading exporter of neon gas. It is a highly purified gas that is used for the most important process - etching circuit designs into silicon wafers to create chips.

Navkendar Singh, Research Director at IDC India told Business Today, “Russia and Ukraine are important in the supply chain of components for semiconductor manufacturing. They produce important gases and rare earth metals, which are used in the lithography.”

Using lithography, etching and deposition, layers after layers of transistors are laid out on the silicon, followed by an interconnected network of copper wires, which could involve anywhere over 300 to 700 steps.

Once these wafers are printed, the chips are shipped across testing facilities such as Amkor Technology Philippines, Inc. in the Philippines and Unisem Group in Malaysia for testing and packing.

Here chips on the wafer that are not functioning are discarded and the ones operational are further sorted, cut, and packaged. Post packaging, there is another round of testing, and the final chips are shipped back to the companies such as Intel, Micron, MediaTek, Saankhya Labs across the world, who then ship them to their clients (OEMs) who put them in the final product.

The industry that was worth about $440 billion in 2020, as per research firm Statista, is estimated to grow to about $550 billion this year, on its way to crossing $600 billion next year.

Dr. Satya Gupta, President VLSI Society of India, Advisor, IESA, says, "Semiconductor Supply chain is a complex Eco-System involving companies from different countries and continents for raw material, equipment, wafer manufacturing, packaging, fabless companies, distributors and finally electronics products as customers. Any small disruption in any part of this supply chain creates a bubble in this complex supply-chain which affects everybody.

This is similar to a small accident on the Highway which can create a bubble and affect the traffic for many hours. Events like war have a significant impact on this ecosystem. Everybody fears escalation of situation and to protect their businesses start ordering semiconductor chips in advance stressing the supply side of the ecosystem. Semiconductor ecosystem is just recovering from shortage of chips during the pandemic and this war will further stress the system leading to shortage of chips, long lead times and escalated prices and impact on all business verticals."

Supply

The coming quarters look challenging in the supply of solder. The increases in the base metals, used for the principal alloys, are symptomatic of many of the constraints, threats and macro challenges this market currently faces globally given the largely unsettled nature of the world right now.

Production of principal metals has been restored, post COVID, but not at a level sufficient to meet final product demands. The major tin mines are in the APAC area, principally in Myanmar, Indonesia and China and this tends to disadvantage non-Asia markets on price and supply.  Unfortunately, some of these countries are susceptible to further COVID spikes and may have to observe further health protocols that will impact metals supply.

Solder suppliers are looking for committed purchases in advance and are advising of lead time increases, due to raw materials constraints, to buyers.

Based on these factors we have a medium risk to supply. To mitigate impacts we recommend over communications with solder suppliers, to track the commodity metal markets daily and to spread risk by developing other sources in a broader sense.

Price

The price for solder products is predominantly driven by non-ferrous and precious metals which account for as much as 90-100% of the composition of solder products

Silver

Silver pricing has stabilized, for the time being,  but could still be subject to price fluctuations by shifting and prevailing market conditions. Inflationary pressures in the countries in which the main producers reside coupled with global instability, felt regionally, could very quickly destabilize silver pricing again. Stabilization is only formed over time and therefore it is highly recommended to monitor the silver market closely.

Price of the silver for the last quarter has been between $730-$760 USD/Kg and trended upwards. Below you can see the trend of the silver after it reached its historical prices $944 USD/Kg in 2020 due to COVID.

This metal typically follows gold and both have correlations to the wider global financial markets. The valuations are also directly impacted by trading patterns and especially when investors look to conventionally safe havens in times of macroeconomic uncertainty.

 

Source: LME.com Chart to show Silver trend since the start of COVID until today

 

Copper

Copper is also increasing from $ 9 to $10 per USD/Kg. This metal has suffered the speculations of the Ukraine/Russian conflict and the actions from the EU and US. Like silver, could be affected if the global conditions change drastically.

 

Source: LME.com Chart that show last three months of copper price

 

Tin

Tin has been the spoiled child of the base metals used in the solder industry.

The price of the tin has seen growth of over 250% in two years and should continue with this trend over 2022. Most of the major tin mines are in APAC, principally in Myanmar, Indonesia, China and Perú. The world depends on the stability of these countries but all carry various levels of instability and risk which could directly impact tin mining and pricing.

 

Source: https://abi.beroelive.ai/

In 2020, some of these producers were forced to reduce their tin production. The recovery in demand has been slow due to the pandemic but continues to improve. As evidenced below, the top producer’s ouputs rebounded from 2020 to 2021. 

 

Source: https://www.internationaltin.org/

 

Tin has been a popular nonferrous metal in the last year. Its usage in appliances and lithium batteries has increased the demand and the consumption as the industry services the drive towards the electrification of vehicles globally.

Tin many applications. Its chemical properties are in high demand since it is a malleable metal and resistant to corrosion. Therefore, is also very useful for the chemicals and plating industries.

 

Source: https://abi.beroelive.ai/

 

These are the primary reasons why we don’t expect tin to go back to the $20 USD/KG. Instead, SMM and LME predictions are to continue in an increasing trend and settle between $40 to 50$ USD/KG.

 

Source: https://www.lme.com/en/Metals/Non-ferrous/LME-Tin#Price+graphs

 

Market Dynamics

• The EV industry is growing fast and driving a high demand for the use of the copper due to its conductive capabilities. Tin has also shown demonstrable evidence that it improves performance in acid lead batteries.
• SAC 305 continues to be the most used alloy in the market.
• SN100 is increasing its coverage as it is a cost effective, no silver alloy with similar results on the applications.
• The industry is also slowly recovering from the recent and ongoing semiconductor constrained market; this will affect the conditions on offer for solder and metals.
• Tin has increased the price of the alloys by almost 40%
• A hedge strategy is key to mitigate price fluctuation. However, due to market conditions, we recommend a more conservative strategy with hedges out for a maximum 2 months of consumption.
• Strong partnerships with key suppliers remains a good strategy to face market challenges and price fluctuations. Ensure suppliers have the structure to execute a hedge strategy.
• Inventory on tin is a constraint so suppliers with direct, solid relationships with the mines are key to mitigate the risk of shortages.
• The Russian invasion of Ukraine and the heavy sanctions implemented by many countries towards Russia could significantly impact the price of the metals.

Sources

https://www.internationaltin.org/tin-boosts-silicon-performance-in-lithium-ion-batteries/

https://news.metal.com/newscontent/101755875/smm-evening-comments-feb-21-shanghai-nonferrous-metals-closed-mixed-amid-strong-risk-aversion-sentiment

https://news.metal.com/newscontent/101755863/lme-tin-prices-surged-by-250-in-two-years-will-it-break-this-record-in-the-future-

https://www.internationaltin.org/global-tin-production-rebounds-in-2021/

https://www.lme.com/

General MRO Overview

• Supply Chain Continuity: The industrial environment continues to show improvement, but recovery continues to be impacted by unprecedented supply chain challenges.

 

 

• Business needs to be prepared not only for the day-to-day impact, but also to develop a contingency plan, Working with strategic suppliers and validating if they are capable to endure during possible contingencies. This practice will mitigate additional hits/disruption on supply.

 

 

• The following actions should be taken to ensure continuity of supply of MRO materials:
  • Maintain robust inventory levels, either internally or at suppliers' warehouses (considering increased carrying cost) and maintain a firm understanding on the market fluctuations.
  • Implement a robust sourcing strategy to overcome current challenges for hard-to-find products.
  • Partnering with key suppliers to secure product and making investments in inventory.
• The overall economic and manufacturing growth continues to drive high demand in MRO in developed and developing economies.
• Trends in automated warehouses, or AS/RS systems, is a new option to optimize time, reduce space usage, increase the Kanban efficiency, and reduce the warehouse headcount creating cost reduction opportunities.
• Adoption of smart technologies in manufacturing environments by developing mobile apps, continues to be a recommendation, ensures the overall management by enabling the real-time monitoring and full traceability of components and smart devices. These applications can be connected to vending machines, automated warehouses, etc., mitigating the possibility of line downs and boosting supply chain to be more efficient with new practices like “auto-order” when getting low on some stock for different MRO components.
• “In-house” suppliers' trends to be a good supply chain opportunity, with options of small “shops” or “hubs” on customer location, which facilitates the communication and provides better services levels, in time and customer business understanding.

PPE

• (PPE) market in the US is poised to grow by USD 8.67 bn during 2020-2024, at a CAGR of almost 8% during the forecast period.
• There will be many ebbs and flows within the PPE market as suppliers look to make calculated decisions based on market trends. Many rush to expand capacity in response to a tailwind in demand for specific items like masks or nitrile gloves, while others look to focus on reducing product portfolios due to the increased competition and enhance their core competencies. Suppliers will have to consider making a few changes to their products in response to the current supply constraints. Material composition, product customization and breadth of product portfolio, and make vs buy of raw materials are all discussions currently in progress with many MRO suppliers.
• To mitigate impact on sourcing, buyer should consider when Identifying suppliers, focus on Multiline due the capability to manufacture and distribute a wide range of products and stock available, based on key elements like geographic presence, available stock, payment terms, and product diversity.

Maintenance

• Formulating a predictive maintenance strategy continues to be an effective cost reduction enable for organizations. Setting pre-negotiated contracts with standard rates reduces request to approval time, offers better contractual rates, increases leverage and aids the level of response with key partners.
• Preventive maintenance should not be limited to only CapEx, but also expanded to facilities. Routinely creating the optimum environment for production, mitigating extraordinary damages caused by natural disasters or environmental changes, or plan for mandatory improvements to maintain the efficiency of the facility are just a few reasons why preventive maintain for facilities is critical. 
• Since the outbreak of the COVID virus HVAC systems, along with facilities cleaning services, have been the center of focus to limit the spread of the virus and keeping people safe within the factory.  HVAC systems should be maintained consistently and evaluated for the proper filter type or air cleaning system to prevent the spread of the virus. Reoccupying a building during the pandemic should not, in most cases, require new building ventilation systems. However, ventilation system upgrades or improvements can increase the delivery of clean air and dilute potential contaminants.**

**(REF https://www.cdc.gov/coronavirus/2019-ncov/community/ventilation.html)

Constraints: spare parts availability for maintenance programs, as well as travel restrictions due to COVID increases TCO.

• Maintenance costs will vary depending on the type of the work being performed, the type of machine, and spare parts available. Logistics is also a challenge and could affect the deliver timeline for the spare parts required. 
  • Suggest having safety stock and an agreement in place for preventive work.
• If a maintenance specialist is required to perform the necessary service you will have to ensure that travel expenses like airfare, meals, lodging and hourly rates are taken into consideration during your service contract negotiations and are captured in the TCO analysis.
  • Again, the preventive-maintained contract is desired, so rates can be pre-negotiated or a training to internal workers can be provided to avoid this cost.

Small Tools

• This market has a very high number of vendors that results in fragmented, low market share concentration and aggressive price-based competition. As there is no real dominant player inthis market we see discounted, competitor-based pricing frequently offered to attract buyers. Overseas Imports are now a common feature in domestics markets which too drive competition for customer’s business
• Tools are homogeneous products resulting in low product specialization. Most tools are designed to work with established and standardized bolt sizes, screws, and socket sets, meaning products are interchangeable across suppliers.
• Wholesalers compete heavily with each other based on product selection to attract larger pools of buyers. Their wide product selection presents buyers with the opportunity to bundle related products to achieve overall cost savings. Furthermore, wholesalers price their products more competitively at the outset to differentiate themselves from the competition and attract customers.
  **(REF https://www.procurementiq.com/)
• Small tool can be produced in the region where used so strategies can be built around this. As the materials are common, the manufacturer of most the small tools (excluding the precision tools) are very standard.

Furniture / Equipment and Installation

• The procurement of office furniture systems typically has an equilibrium in negotiation leverage between buyers and sellers. Buyer power is largely supported by strong competition in the market stemming from low market share concentration, high competition from imports and low product specialization. However, rising prices, a lack of substitutes and high switching costs harm buyer power.
  • Establishing an alternative supplier as a second option is suggested to mitigate the price increases due the raw materials price increases or cost of standardization.
• The office furniture market is highly concentrated in about 4 suppliers controlling more than the 25% of global business revenue. 
• During 2021, office furniture prices decreased giving buyers the ability to obtain lower-priced product options. Moreover, low market share concentration has promoted price-based competition, benefitting the buyers.
• Low availability of substitutes and high switching costs due to the desire to maintain like-for-like material & design have negated some of these market advantages. Workspaces are necessary to office environments, which will continue to drive some demand. However, the number of people working from home will prevent significant growth in this market providing the buyer with good leverage.

**(REF https://www.procurementiq.com/)

Industrial Furniture

• Specifically, the COVID-19 pandemic has caused lumber shortages and steel price fluctuations, which have contributed to price volatility.
• Although there is some degree of customization available, most demand is tied to a large pool of suppliers that offer similar products of comparable quality. This provides the consumer with the ability to obtain aggressive pricing by evaluating multiple sources of supply and leverage market competition.
• During the next three years, increasing prices will hurt buying power. As increased vaccination and better containment of the COVID allows for the loosening of pandemic-related restrictions, key sources of demand such as industrial production and the construction of nonresidential buildings will return to full operating capacity, thus driving demand upwards.
• For logistics, this commodity is primarily affected for the raw material like stainless steel, plastics and aluminum due transportation from Europe, along with the increase on the cost of the container shipments.
• As employment rebounds due to lowered restrictions and reduced uncertainty, corporate profit will increase, leading to greater investment in capital, such as industrial furniture.
   

**(REF https://www.procurementiq.com/)

Office Supplies

• We are forecasting that price trends will continue to increase for the next three years. Larger supplies expand their reach via merger and acquisition activity.
  • During the recent period, M&A activity surged. 3M acquired medical wound supplier, Acelity in 2019 so they could use their own adhesives as inputs for medical supplies. (This supports the strategy proposal to manufacture internally key consumables) 3M is likely benefiting greatly from this acquisition as demand for medical supplies has increased since the pandemic began, which will encourage other players to follow suit.
  • Staples recently sold their Europe section to Office Master; however, they still retain their footprint in other regions for the moment.
• Imports declined from 2020 to 2021
  • The market has been impacted by COVID because China, where the pandemic began and hit hardest early on, is the leading exporter to the US market. Imports from China have declined 35.9% compared to a year ago, creating opportunities for other countries, such as Mexico, to export more to the US.
  • Logistics can affect some sub-commodities, but most of the distributors have hubs or warehouses where they have safety stocks to avoid supply chain disruptors.

Main Raw Materials Constraints

• Stainless Steel: Depending on the type pf stainless steel, mostly focus on the alloy 301, the market expectation is to have a compound annual growth rate about the 7.8% from 2022 to 2027.
  • Main players for 301 alloy are: Arcelor (Europe, Americas & ACIS) POSCO (South Korea), YUSCO (Taiwan), Acerinox (Spain, US & South Africa), Nippon Steel Corp(Japan).
  • Most impacted Sectors are Equipment Pieces (affecting CapEx), computer PCS (affecting market in general).
• Steel: 2021 closed with and increase of 11% production In Americas, Mexico one of the key producers.
  • Main players remain the same as stainless steel, but with different combination and market penetration. Mexico as a good place to obtain the material directly for construction or with low controlled market conditions.
  • The American market remains stable as the Ferroalloys from US has fluctuation while Mexico remains stable.
  • Other strong regions are Austria, Malaysia and Georgia.
  • Even when the market and production is stable, demand has been increasing due to  construction in the region, generating shortages for short periods of time.
    • This creates longer lead times for delivery or is pushing requestors to procure material for other regions.
    • Due the material characteristics itself, like dimension and weight, makes it difficult to procure the material for regions “far” from where it will be transformed or used.
• Aluminum: The market showed a global growth of a 12% on 2021, combined with a decrease of production near to the 10% in some areas like Mexico. Yet Mexico is not a big player on this market as it is controlled mostly by China, India & Russia.
  • Considering China was affected due to the ecological restriction for aluminum production (about the 57% of worldwide supply), it’s impacting the general market including auto production.
  • Pay close attention to the cost and market conditions as the Russia-Ukraine conflict could be impacting these dynamics.
  • High cost and low supply is also affecting the ecological energy creation, as most of the components used on this technology are made from aluminum.