Oil price hike hits disc manufacturing

While the third quarter of each year is traditionally an off-peak period for blank disc makers, the third quarter of 2008 will potentially see makers facing an additional negative impact as polycarbonate suppliers plan to raise prices from the current level of US$2.3-2.4/kg by 5-7% due to large hikes in oil pricing.

The traditional slow sales period is mainly due to decreased demand in the US and Europe over the summer, the sources indicated. Based on received OEM orders, utilization rates are estimated to drop from 70-80% currently to 50-60% in the third quarter of 2008, the sources noted.

While OEM quotes for CD-R and DVD+R/-R discs for April and May of this year generally remained unchanged, a few second-tier Taiwan-based makers, including Prodisc Technology and Optodisc Technology, have offered lower quotes in June in order to clear inventory, the sources pointed out.

With the decreased demand but increasing costs, it is not yet certain whether OEM pricing for CD-R and DVD+R/-R discs for next quarter will remain unchanged or slip, analysts say.

In separate developments, second-tier Taiwan-based CD-R and DVD+R/-R discs producers are facing short supplies of TFP (tetrafluoro-propanol), a dye solvent used in the manufacture of optical discs, and consequently some have reduced production while others have even stopped production temporarily, according to industry sources.

China Fluoro Technology and two other chemical manufacturers in China as well as Daikin Industries in Japan are major producers of TFP around the world, together accounting for more than 90% of the global production capacity, the sources indicated.

In preparation for the 2008 Beijing Olympic Games, the China government in April 2008 asked the three TFP makers and other chemical producers to cut or stop production for 100 days in an attempt to reduce air pollution, the sources pointed out. the sources analyzed (Source: Digitimes)

Story filed 21 June 2008

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