Economic Outlook of Top Five Die & Mold Demand Industries in the Second Half of 2021

Key industries on a recovery path...Premature to anticipate recovery in die and mold demand
 

Global flagship industries and markets appear to be improving amid the COVID-19 pandemic
 

In the first half of 2021, the overall die and mold industry remained stagnant due to sluggish exports.  The global COVID-19 pandemic dealt a huge blow to die and mold exports in the first half of 2021, falling 21% year-on-year to USD 1.17 billion.
 

The performance of key demand industries and the die & mold industry in the second half of 2021 will depend on the effect of COVID-19 on the economy and its recovery.
 

According to the Korea Institute for Industrial Economics & Trade (KIET), global flagship industries led by advanced countries and China are expected to recover from the impact of COVID-19 in the second half of 2021.
 

On the domestic front, flagship industries are anticipated to recover to the pre-pandemic level attributable to the recovery of global demand and increase in export unit price (up 16.7% year-on-year), which in turn is to contribute to improving the overall die and mold industry.  However, timing as well as long-term market stabilization are prerequisites for the improvement of flagship industries to attract new investments for development and subsequently trigger demand for die and mold products.  Against such backdrop, the overriding view is that the die and mold industry will continue to face challenges in the second half of 2021 as was the case in the first half of the same year.
 

Yet, the increasing number of COVID-19 vaccinations and the economic recovery momentum in major advanced and emerging countries (excluding India and certain parts of ASEAN) is furthering expectations that the global economy will turnaround.
 

In particular, economic stimulus measures of each country are to expand infrastructure investments and strong demand for “untact” products, such as IT devices and home appliances, will continue on in the second half of 2021.

 

Industry utilization rate and premium product demand to increase in advanced countries
Raw material and component prices to continuously hike
 

Huge demand increase in the domestic die and mold industry is expected from the automobile industry, which is the largest die and mold consumer, attributed to the lifting of travel restrictions and rapid economic recovery in such advanced countries as the US and EU.  Productivity is also expected to grow in the US, Mexico and Eastern Europe, excluding India.  In addition, despite the growth in demand for electric vehicles and luxurious cars, the domestic demand market is anticipated to see growth slowdown due to the recent supply glut issue.  However, the increase in the utilization rate of overseas plants is to drive up demand for die and mold products.

In the case of the IT device (smartphone) industry, there is steady demand thanks to increase in online learning and purchase of new 5G smartphone models; however, negative factors exist due to further entry of foreign-made new products and LG Electronics’ shutdown of its smartphone business.

As for the household appliance industry, globalwide demand growth is expected centering on premium products.  While export growth momentum is anticipated in line with the economic turnaround in major advanced countries, production is to slightly decline compared to the second half of last year due to lesser policy support from the government, decrease in housing transaction volume, etc.

Likewise for the display industry, exports and production is to slightly grow in the second half of 2021 based on the growth momentum of the premium product market (such as increase in the manufacturing of OLED products).

The semiconductor industry is to remain competitive and production growth is expected.  Overall growth momentum will continue in the second half of 2021, driven by higher utilization of domestic production facilities, growth in SSD demand, and demand for semiconductor capacity increase.
 

Require strategic measures in response to new demand for home appliances and biohealth amid the COVID-19 pandemic
 

However, the increasing globalwide industry utilization rate and easing of travel restrictions are to drive up demand for such raw materials as steel and petrochemicals.  Accordingly, the sharp hike in the price of raw materials and parts and supply chain uncertainty will remain burdensome on the die and mold industry in the second half of 2021.

Meanwhile, amid the prolonged COVID-19 pandemic, growth momentum is observed in the home appliance, biohealth, and renewable battery industries. Such industry turnaround is to continue over the long run, which calls for strategic measures in response to changes in demand within the die and mold industry.

Source : KIET(Korea Institute for Industrial Economics & Trade)