Home Commodities Global commodity price and supply indicators signal semiconductor shortage showing signs of...

Global commodity price and supply indicators signal semiconductor shortage showing signs of peaking

39
0

The S&P Global PMI™ Commodity Price and Supply Indicators
track the development of price pressures and supply shortages each
month for at least 20 items using responses gathered from the
S&P Global Manufacturing PMI survey. Amongst which,
semiconductors saw the most severe upward price pressure in April.
That said, there are hints of supply shortages and price increases
peaking for semiconductors, even as the situation remain severe by
historical standards.

Price increases and supply shortages remain at worrying
levels in April

The latest data from the Global PMI Commodity Price & Supply
Indicators by S&P Global indicated that
manufacturers worldwide continued to see sustained price and supply
pressures in April
. In both cases, price increases and supply
delays have risen in terms of rate of growth and incidence again in
recent months, after showing some signs of easing in the second
half of last year, amid the twin shocks of the Ukraine war and new
COIVID-19 lockdowns in mainland China.

Global Commodity Price & Supply Pressures: All
Items

Global Commodity Price & Supply Pressures: All Items

The Global Supply Shortages Index – calculated from the number
of times items have been listed to be in short supply each month,
whereby an index value above 1.0 indicates that supply shortages
are above the long-run average and the higher the figure, the
greater the degree of shortages relative to the trend – was
unchanged from March’s four-month high.

Likewise, the price pressure index – calculated using a similar
methodology of the number of purchasing managers reporting a
specific item to have risen in price during a survey month less the
number reporting that item to have fallen in price – also stayed
unchanged from March. All of which pointed to persistent and
elevated supply issues and inflationary pressures.

Of the items tracked, transport was reported to be facing the
most severe shortage in supply, although it was semiconductors that
continued to face the steepest price pressures in April.

April sees fewer reports of semiconductor price
increases and short supply

That said, diverging from the worsening trend for all items,
semiconductor price pressures and supply shortages either receded
or stayed little changed in April. Shortages of semiconductors
eased from around eight times the long-run average in March to
under seven times the normal level, while price pressures were
almost unchanged at around 20 times the normal level. Although
these remained elevated at many times their long-run averages to
indicate sustained pressures, they have clearly departed from the
heights registered in mid-2021 and early-2022.

Global Commodity Price & Supply Pressures:
Semi-conductors

Global Commodity Price & Supply Pressures: Semi-conductors

Stabilising price and supply indicators hint at peaking
chip cycle

Examining the short supply and price pressure indicators
alongside equity price movements, we look at how these PMI gauges
correlate with the SOX index. The Philadelphia semiconductor index,
known as SOX, is a market capitalization-weighted index comprising
30 companies that are primarily involved in the design,
distribution, manufacture and sale of semiconductors. Funds based
on the SOX include the likes of the iShares Semiconductor ETF
(SOXX).

The SOX index was seen rising in tandem with the semiconductor
price pressure index over 2020 and 2021 amid shortages and spiking
demand. As mentioned above, the short supply and price pressure
indicators for semiconductors reflected that some of these factors
that led to the phenomenal rise in semiconductor-related company
share prices appear to be stabilising into the start of Q2
2022.

The SOX index was seen peaking around January, with prices
having since fallen 13% in the first quarter of 2022 and clocking
further declines in April. While weak risk sentiment had a part to
play, with investors concerned about monetary policy and
geopolitics (according to the
S&P Global Investment Manager Index
), signs of the chip
cycle peaking inject little confidence for prices to trend
otherwise. As far as the trend is observed of semiconductor supply
shortages, using a three-month moving average assessment of the
PMI-based index, global manufacturers are not seeing the overall
supply situation worsening when compared to 2021. Likewise is the
case for price pressures.

Evidently uncertainty persists in the near to medium term,
including how fast demand from China may bounce back from the
current COVID-19 disruptions, but the shortage-driven boost for
semiconductor prices may be running out of air according to the
latest indications.

Global semiconductor supply shortages and price
pressures vs. SOX index

Global semiconductor supply shortages and price pressures vs. SOX index


Sign up to receive updated commentary in your inbox
here.

Jingyi Pan, Economics Associate Director, S&P Global
Market Intelligence

jingyi.pan@spglobal.com

© 2022, IHS Markit Inc. All rights reserved. Reproduction in
whole or in part without permission is prohibited.


Purchasing Managers’ Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.

Learn how to access and receive PMI data


This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.

Source link

Previous articleCommodity Caution: Bullish To Bearish On Commodities
Next articleThree commodities added to FMCSA’s COVID emergency declaration

LEAVE A REPLY

Please enter your comment!
Please enter your name here