• Stable lead times for most common gauges.

• Iron ore price was US$151.25 per metric ton in April 2022.
• Pricing is relatively stable.
• The price decline of iron ore appears short-lived as the Chinese government cracks down on speculative trading. This has led many market analysts to forecast a rise in ore prices in the coming months.

• Iron ore price was $151.25 per metric ton in April 2022.

Iron Ore Monthly Price – US Dollars Per Dry Metric Ton

Iron Ore 5 Year Price – US Dollars Per Dry Metric Ton

• No change in lead times for most common aluminum and copper types.

• Near term tightness in the copper market is expected to remain in the near term as supply-side cost and inflation increases persist.
• Demand is weakening across the globe.
• The bullish factors of power rationing and limited primary supply tightens the market.
• Monetary easing in China could indicate stimulus on infrastructure, grid and renewable energy.
• Uncertainty: the low inventories in Europe compound this issue, and the sanctions on Russia and lower exports of gas for Europe, which would create further volatility and lead to price spikes.

• Copper price was $9,584.6/Ton on April 22.
• Aluminum price was $3,244/Ton on April 22.

Copper, Grade A Cathode Monthly Price - US Dollars per Metric Ton

Aluminum Monthly Price - US Dollars per Metric Ton

• WTI price is $119.3 per barrel as of May 31, 2022.

• In North America, Covestro USA declared force majeure on PC and BPA production at Baytown, TX and extended lead times to 12 weeks in a letter dated May 17, 2022. Trinseo USA followed with a letter on May 18 announcing force majeure. Alternative supply of polycarbonate (from Asia) continues to be very limited as the shipping freights are high and the delivery times are long and uncertain.
• In Europe, the general situation in terms of oil prices and energy continue to keep pressure on costs for the producers.
• In Asia, the average PC prices are projected to edge down for Q3 2022. On the supply side, expect production to be in high level with newly launched producers Hainan Huasheng and Shenma.

• In the case of nylon 6, the production costs are rising quite rapidly, with producers announcing frequent price increases. As for nylon 6, supply and demand are still the main drivers for price movement. The prices are expected to decline with ample supply and lackluster demand in the coming months.
• Flame retarded and highly pigmented compound prices could continue rising along with the worldwide shortages, but glass fibers seem to be more available in the market.

• Prices of copolymers and homopolymers are stable globally.

• There are 4 out of 10 producers under force majeure namely Total Energies, Ineos, Braskem & Lyondell Basell. 
• In North America, demand is trending down amid ongoing inflationary pressure.
• In Europe, supply is generally balanced. Import prices are lower and further reduction to domestic polypropylene is expected.
• In Asia, polypropylene prices are under downward pressure on the back of weak domestic and export demand.

• In North America, prices are expected to stabilize and, towards the end of Q3 2022, begin to edge down on lower costs and improving supply conditions. By the end of the year, prices could be 10 cpp lower.
• In Europe, oil prices remain at high levels and could stay at that level through Q3. In March and April, a huge cost increase for energy (and feedstocks) impacted producers, who have been passing these increases to their customers.
• Supply from Asia is rising as China’s economy slows with COVID lockdowns. Pricing in Asia is declining.

Resins Price Forecast - North America 

Resins Price Forecast - Western Europe

Resins Price Forecast - Asia Pacific 

Polycarbonate

Source: IHS Markit

ABS

Source: IHS Markit

• No material constraints are foreseen. However, we need to closely follow the situation in Europe.
• 2.065 million tons of corrugated capacity is expected to come online in the next 5 to 8 months. New capacity totaling 900,000 tons has been announced for startups in 2023. The additional capacity is predicted to add stability to the market in 2023.

• Corrugated Market: while it appears that some market sectors are slowing down, the overall market continues to show strong demand. Currently, box shipments are up 6% since January, making this the highest increase rate in 27 years. Additionally, 900,000 tons of board has been announced for startups for 2023.
• Resin and Other Packaging Lines: supply is still somewhat constrained even on the basic items, v-board, stretch films, adhesive, tapes and strapping. Be prepared for occasional out-of-stock issues. 

• Mexico - Wood: due to the worldwide wood shortage and global wood prices, the sawmill announced a new increase of 5% in Chilean solid wood and in all its presentations as of May 1.
• US Containerboard increased for the fourth time in a year and a half. 42 lbs. Unbleached Kraft increased $60 to $935/ton. Unbleached Kraft 42 lbs. linerboard is now up $220/ton or 30% since November 2020. This is the highest price ever recorded. Box shipments have grown at the highest rate in the last 27 years at almost 6%. The increase has been caused by inflation and supply/demand. The war in Ukraine has also played a pivotal role as oil and gas prices increased to record levels.
• US boxboard prices in May held in place ahead of a new round of $50/ton price increases across all grades that are lined up for late May and into mid-June.

Resin Prices - US

Resin Prices - EUROPE

Russia’s invasion of Ukraine has cause oil prices to spike, sanctions to be implemented, and trade to stop or change dramatically. Resin markets are feeling the influence of rising oil prices. Normal spring maintenance downtime and some unexpected plant outages, combined with consumer shortages, rail car limitations, other logistics instances, and additive constraints have tightened up parts of the market. Interruptions in base feedstock supply like acetic acid, and isophthalic acid due to capacity constraints. These constraints caused increasing cost of PTA (terephthalic acid) and MEG (monoethylene glycol), the primary feedstocks for PET. Import availability and pricing continues to be a problem with high cost and non-reliant ocean freight.

Lumber Prices - US

• The supply of solder continues to be impacted by the availability of the base metals and alloys. Tin and silver continue to be the drivers on cost. By their nature, both metals are subject to speculation and manipulation and are highly affected by the geopolitical and market conditions. However, it is fair to mention that besides the metal influences, solder companies are suffering increases due to the high inflation that is affecting the world.
• Competition has become more aggressive, and a lot of new suppliers have gained some market share that has been ignored by the top tier suppliers. Mostly in the solder bar space where the profit is not as high as it is in wire and paste. These new suppliers have found an opportunity in making the bars more “effectively and efficiently”.
• Macdermid Alpha continues to be the leader in the segment and after the acquisition of Kester in 2019, has consolidated its position with an umbrella of products covering different industries and segments. (Solder, Chemicals, etc.). AIM, Indium, Senju, Nihon, and others continue to struggle to gain market share. Inventec and CRM are European suppliers with aggressive strategies in the Americas.
• Recycling is of great importance as we consider the cost of solder. Most of the tin suppliers and mines are based in the APAC region and many of these facilities are subject to environmental restrictions, Covid, government tariff and unions and the high demand from China. This affects not only the availability, but it also pricing for the rest of the world. Suppliers have found the solder scrap market a great alternative to source minerals. Besides this, the new technologies are allowing suppliers to recover pure metal in some cases with less contamination than the material processed from mines.

Supply Analysis

• With the growth of the EV industry, solder companies are investing in new technologies and products. Solder with better capabilities such as “no cracking” and good tensile strengths in high temperature environments could benefit all industries.
• The regionalization of solder products will be key to mitigate the risk of having a shortage. Supply strategies like consignment, VMI, buffer inventory etc. are taking on major importance due to the uncertainty of supply.
• The recent lockdowns at China affected the principal cities, first; Shenzen, then Shanghai. The Shenzen lockdown hit the solder industry as Alpha, one of the biggest solder suppliers, has one of its biggest manufacturing locations there in order to fulfill China demand.
• A lesson learned from the lockdowns is to ensure alternate locations or 3PLs with your key suppliers are available in order to have more options from where to pull the material.
• The Covid domino effect will continue to affect the supply chain. Review your internal inventory levels and safety stock calculations.
   

• Solder market has been very dynamic since the start of 2021. This industry has been affected by the turbulence in the metal’s market which is the main driver in the price of solder alloy. There are different types of solder depending on the application:
  • 1. Solder Bar - Simply a formula of melted metals, principally tin, and the balance is between Silver, copper bismute and others.
  • 2. Solder Paste - A mix of powder metal and flux.
  • 3. Solder Wire - As the name says, is wire of different rolled alloys.
  • 4. Solder Preform - Different forms customized for specific applications.

• The function of the different types of solder is essentially the same, making strong joints of different materials. For the purpose of this report, we will focus on the solder types more used in the electronics industry such as bar, paste and wire.
• The solder market has been very dynamic since 2021. This is due to the price and supply volatility of raw materials. Tin, silver, and copper have been impacted the most due to increased demand, geopolitical issues and the Covid situation we have faced since 2020. The key factors plaguing the solder market are the raw material price variations, growth in emerging markets, and high demand from the current markets.
• The demand for Solder has increased in almost all regions due to the re-activation of the economy after Covid. According to GVR, the global solder market is expected to grow at a CAGR of 3.4%. This is due to the demand for consumer electronics, EVs and home appliances after Covid.
• The EV industry has taken a leading role in driving demand within the solder industry. All the principal automotive companies are developing aggressive programs focusing on more and more electrical vehicles, for example; Ford has announced a growth rate of 139%, VW 65%, and Tesla 81%. This has tremendously increased the demand of components, chemicals and solders. The high temperature environment found in the EVs requires solder with more flexibility, life and resistance to cracking and voiding.

• Beyond the high demand from the EV industry, Covid has changed the way people live, with the need for a home office environment, increases in consumer demand for home appliances such as dryers, washing machines, smart phones and HVAC, have all triggered the need of solder, components, and others.

• The main alloys have increased in demand due to the continued growth of the end markets. Special and high-tech applications demand the use of high silver resulting in SAC 305 being the most demanded solder in its different forms (BAR, PASTE, WIRE, Preform).
• SN100C has gained some traction in the industry, some studies have shown that this solder performs better under some applications. It is a cheaper solder with good results on yield strength, vibration and erosion but still to be accepted across the industry. This solder continues to be a great cost-effective alternative to SAC 305 solder.
   

• The price of the principal alloys continues to be very dynamic and sensitive to the metals market conditions, especially tin and silver. However, due to the high inflation experienced in the past few months, some suppliers are increasing prices between 5%-7% on the portion not related to metals. This is a good time to explore new opportunities to minimize the impact (competitive bidding, change of alloy, new technology).
• Tin: between 2021 and 2022, tin increased in price from $13/Kg to $50/Kg reaching historically high values in March of this year. The growing importance of tin in all industries has maintained this metal at over $40 per kilogram with no expectation of it reducing to early 2021 levels in the short term. In May, however, tin fell to $34 per kilogram due to the China lockdown and high inflation. This seems to be a well needed break on the prices of the solder, but it is not expected to last more than one quarter. This metal is highly manipulable due to the supply vs demand force. Mines are reduced and mainly based in APAC, so prices are subject to production reductions in order to balance the offer and demand, especially now that operating rates from producers dropped 4.72% again recently. Expectations are that tin pricing will stabilize between $35/Kg to $40/Kg once China exits the recent Covid lockdowns.
   

• Silver: has been relatively stable. However, due to the high price of the precious metal, variations considerably affects the final price of the solder. The Russian invasion of Ukraine and the various penalties and retaliations between Ukraine allies and Russia has seen all the investors take cautious position with the dollar and other currencies. The high inflation has forced some countries to take anti-inflation actions like adjusting interest rates as the US Federal Reserve did recently adjusting from .50% to 1.0%, expecting to close with an extra .50% by June-July. All of these actions are reducing the transactions and demand of the precious metal which has maintained low prices, as of May ($22.06/oz). However, prices could rebound in the next quarter once the Chinese lockdown ends, and the markets adapt to the adjusted interest rates.

• Principal alloys have shown a decrease in the price strictly based on the metals. However, these reductions are not expected to be sustained for more than one quarter once the metal markets stabilize from the current situation.

• It is very important to monitor the metals market daily. Hedge strategies continue to be a good option to reduce price variations however executing hedges for more than 1 month currently is a risky choice. Most of the investors are adopting a “wait and see” position. 
   

• Supply will continue to be at risk for the next three quarters. Review inventory and safety stock calculations to protect your supply.
• Follow the raw materials indices closely. Focus on the key raw materials for the solder you consume (predominately tin, silver and copper). Take a “wait and see” position, and if you prefer to speculate on futures, proceed with caution and be conservative.
• Invest in testing alternative alloys. SAC 305 is the most widely used alloy in the industry but consider SN100C if your buying position is weak to avoid shortages due to high demand.
• Identify your supplier’s manufacturing locations and develop sourcing strategies to improve supply lines. Consignment, VMI, and buffer inventory are good models to explore.
• Strengthen your relationships with key suppliers but find alternative sources. It’s a good time to forget about the name on the solder and focus more on the content and performance itself.
• Investigate solder recovery technologies. Using MS2, you can recover almost 60% of solder scrap material. This could bring improved commercial benefits and provide another option for supply.