Semiconductor shortage persists, hurting automotive production, chemicals

Robert F smith

BARCELONA (ICIS)–The global shortage of semiconductors shows no sign of abating and is still badly impacting automotive production, as well as demand for some chemicals. Since the second half of 2020, a sharp increase in demand for electronic goods and domestic appliances for the pandemic lifestyle has increased demand for […]

BARCELONA (ICIS)–The global shortage of
semiconductors shows no sign of abating and is
still badly impacting automotive production, as
well as demand for some chemicals.

Since the second half of 2020, a sharp increase
in demand for electronic goods and domestic
appliances for the pandemic lifestyle has
increased demand for computer chips to
unprecedented levels, leading to acute
shortages for all end-use markets.

The situation was made worse by automotive
component manufacturers which cancelled orders
for the chips earlier in 2020, when the
pandemic led to a collapse in transport and
demand for new vehicles.

Supply of semiconductors has also been
constrained by the worst drought in nearly 60
years in Taiwan.

Taiwan Semiconductor Manufacturing Co. (TSMC),
the world’s third largest manufacturer, was
forced to truck water to its plants; the
company reportedly uses
156,000 tonnes/day of water, though more than
85% is recycled.

Heavy rains in early August have recently refilled
reservoirs.

Adding further woes to supply of computer
chips, in March 2021 a fire destroyed parts of
a plant owned by Renesas, a major Japanese
supplier.

With repairs still underway, production is
still way below pre-fire levels while there is
a growing backlog of orders from the automotive
sector.

Click on image to enlarge

Click on image to enlarge

February’s US winter storm, and ongoing
logistics and supply chain problems around the
world, have also stifled supply.

There remains an extreme tightness and shortage
of semiconductors for automotive manufacturers.

Many of them, including BMW, Volkswagen, Ford,
Jaguar Land Rover, Renault and Daimler, have
been forced to reduce production rates or
temporarily stop their facilities since late
last year.

NEW AUTOMOTIVE PRODUCTION
CUTS
The automotive sector is
still suffering from the semiconductor
shortage.

In the US, the picture is mixed; last week, US
automaker Ford said it is cutting production at
three North American assembly plants, while
Japan’s Honda is also cutting some production.

However, in July there
was
an 11.2% jump in US production of motor
vehicles and parts as a number of auto makers
trimmed or cancelled their typical July
shutdowns.

Oxford Economics forecasts a rebound to
pre-pandemic levels by Q4 for US autos.


In Europe, there are expectations that the
automotive sector situation will worsen in
September as Toyota is
planning
to reduce production by 40%
(around 40,000 fewer cars for the European
market).

Meanwhile, other car manufacturers were heard
to have further extended holiday breaks.

Toyota recently announced that it would slash
worldwide vehicle
production  
by 40% in September
because of the shortage, and Volkswagen also
indicated it would curtail output.

In August, coatings maker PPG estimated that global
car production was reduced by 2m in the second
quarter thanks to the semiconductor shortage,
causing a $100m sales impact.

PPG expects continued constraints in auto
sector demand through this year.

According to Oxford Economics, the EU and the
UK’s motor vehicle production for the full year
is forecast to decrease 15% year on year in
2021 from 2019.

However, registrations of electric vehicles
(EVs) will continue to increase, said Jincy
Varghese, ICIS demand analyst.

CHEMICALS IMPACT
Strong
demand from many other end use sectors has
propelled chemical company profitability
through 2021, despite the problems in
automotive.

Constrained supply across some chemical value
chains has kept margins high.

Covestro, for example, said
in August
that tight supply and demand
conditions would propel full year earnings to
the top of its forecast range.

“Demand is very strong despite all the
negatives that you hear, such as shortages in
the automotive industry, supply chain
disruption,” said CEO Markus Steilemann.

“Automotive industry demand is still higher
than the industry can supply.”

But in some product groups there has been a
noticeable impact.

In Europe, consumption of cyclohexane (CX) is
being
hurt
by lower demand for automotive
manufacturing.

A buyer in Europe’s acrylate esters market
is
pessimistic
about automotive demand,
forecasting “the bubble is going to burst” and
demand will weaken in Q4.

Demand from automotive is also less
robust
than other sectors in Europe’s
caprolactam (capro) market.

Also in Europe, flexible slabstock conventional
polyether polyols contracts fell in
August for the third consecutive month; weak
demand from automotive plus a seasonal lull
were blamed.

Meanwhile, in Asia a polybutylene terephthalate
(PBT) price upswing came
to an end
in August as buying momentum
slowed, with some players expecting the weak
demand to persist into the fourth quarter.

PBT, an engineering plastic, is used by the
auto sector for mirror housings, fans, fuse
boxes, cowl vents, and motor and ignition
system components.

Focus article by Will Beacham

Next Post

2022 Porsche Taycan Cross Turismo electric wagon arrives in Australia

Customer deliveries for the electric Porsche Taycan Cross Turismo are due to start next month. View 3 images The first examples of the Porsche Taycan Cross Turismo electric wagon have arrived in Australia, with customer deliveries due to commence in the coming weeks. The high-riding wagon twin to the Porsche Taycan […]