TrendForce：After the panel demand peak, panel capacity utilization will face supply glut in H1’13

Based on the observations of WitsView, the display research division of the global market intelligence provider TrendFroce, the global large-sized panel supply has been supported by China’s energy-saving subsidy policy and increased largely, encouraging panel makers to lift average utilization from 70%-75% in H1’12 to above 80% in H2’12. Except for the sales slightly stimulated by China’s October 1st holidays and low-priced campaign during Black Friday in North America, other regions haven’t showed significant sales, which are not equivalent to panel makers’ aggressive attitude on shipments, implying the downstream inventory risks are quietly rising.

WitsView indicates that, panel makers’ average utilization rate maintains at around 80% but shows signs of weakening as the demand peaks. Panel makers’ forecast for 2013 market will be the determinant for the following direction of capacity adjustment. In view of slowing demands and possibly dropping panel prices, Korean panel makers are expected to lead to revise down utilization to trim inventories in hands during slow seasons and avoid the inventory loss risks on market downturn. Contrarily, Taiwanese makers estimate the demand to rapidly heat up after a quarter of adjustment. Even in the slow season, it is not much risk to increase cell inventory in hands, and likely to increase shipment in the hot season, leading to Taiwanese makers’ unclear attitude on revising down utilization. 

WitsView’s research manager Boyce Fan said that, if the Q1 panel capacity utilization maintains at above 80%, the glut ratio will climb to 12% in the condition of decreasing demands, and if the panel capacity utilization rate drops to around 75%, the glut ratio will recover to the balance of 5%. But another indicator to be considered cautiously is that the H2’12 overstocked inventory will be delayed to early 2013 by downstream clients, and the delayed inventory will offset the reduced production by panel makers, causing the supply-demand ratio to maintain at a high level of 11%.

IT panel price trend is continued to be pressed by the softening demand while the demand for TV panel also shows a weakening course, inventory gradually climbs and prices see signs of loosening. WitsView believes that, once TV panel prices show noticeable trend of dropping, the panel utilization must face pressure to be adjusted, and the revise level and timing will determine if the hot season in the second half the year can be expected.
 
Illustration: 2012-2013 large-sized panel glass substrate input area trend by quarter