Over 57% lower year-on-year, the average value of the Commodity IQ Global LMO Battery Price Index for hydroxide-based cells is more than 30 points below the baseline. The Li-ion battery indexes will generally keep falling on stalled EV demand and speculative lithium buying by EV makers. However, procurement teams should acknowledge that price upswings like those of 2022 may again become prevalent as the Chinese economy continues to falter, high borrowing costs extend planned critical battery material capacity investments, and if consumer electronics demand ramps sharply. 

Programmable logic inventories finished 2023 up by 22% versus the year prior, after rising by 28% sequentially in Q4 2023 – positively moving prices and lead times for the buy side. The Q4 2023 quarter-on-quarter decrease in the Commodity IQ Demand Index was within 2 percentage points of the previous forecast and is projected to offset the Q1 sourcing activity upturn. Design actions will ebb by 1% in Q1 the previous quarter, yet will increase by 13% into Q2, suggesting demand increases in H2 and beyond. 

Resistor prices are expected to remain stable for the next three quarters, as manufacturers have unused capacity and ruthenium cost inputs are down slightly. The Commodity Price Index for resistors fell month-over-month in January by 5.4% after declining 8.9% from Q4 2023 to Q1, but year-on-year in 2023 was up 4.8%.

The Commodity IQ Price Index for amplifier, converter, power, and signal analog devices fell by an average of 20% sequentially in Q4 2023. Texas Instruments is extremely aggressive on pricing, prompting other players, including Onsemi and Microchip, to follow suit. High-performance analog product prices will be mostly flat-to-flexible; standard products are ripe for cost-downs, particularly for new orders.

Despite indications of a rise in PC demand in Q4 2023 and expectations of a strong rebound in shipments in 2024, demand for computer-related chips is following divergent trends in Q1, with microprocessor sales set to increase while total memory is on track to decline. 

Most ceramic capacitor manufacturers are aggressive and flexible on pricing to maintain or increase capacity utilization. However, slowing rates of cost reductions are likely as manufacturer operating margins erode. The pricing of high-end products, like smaller case sizes and high-capacitance/high-temperature parts, remains elevated and exhibits upward trends. Commercial-grade capacitor demand remains weak while inventory levels drop, necessitating the monitoring for sudden demand upticks, which may cause short-term supply issues.

Year-on-year, the Commodity IQ Demand Index collapsed by 19%, 26%, and 35% for amplifiers, power analog, and signal ICs, respectively, in 2023. Amplifier, power, and signal analog IC inventories are over twice the Commodity IQ Lead Time Index pre-pandemic baseline. Both add up to pricing favoring the buy side. Texas Instruments is extremely aggressive on pricing, prompting other players, including Onsemi and Microchip, to follow suit. High-performance analog product prices will be primarily flat-to-flexible. Standard products are ripe for cost-downs, particularly for new orders.

Global sourcing activities for sensors were down by 27% for 2023, and excess inventories still linger in the supply chain. Chinese sensor producers are vigorously seeking new design-ins with shortened lead times and more competitive prices. Demand across all sensor types is forecast to rise by 6% sequentially in Q1; suppressed automotive, industrial, and medical demand paired with a slowly recovering smartphone market will translate into largely flat pricing into H2. However, cost-downs from tier-one suppliers are available for new projects.

Previous Commodity IQ sourcing guidance to focus on graphite and manganese supply due to China’s export graphite restrictions has come to fruition – with export sales down a massive 91% month-on-month in December and the surge in sales in November before the restrictions, according to the GACC. China accounts for nearly all refined natural graphite, and China produces over 95% of battery-grade manganese. Conversely, lithium and cobalt remain in oversupply, with excess inventories and downstream de-stocking prevailing into H2 as automotive and other OEMs continue to push out orders and downgrade 2024 demand forecasts. While surplus nickel – LME inventories have risen markedly since Q3 2023 – lackluster demand has driven pricing down by 47% year-to-date. The buyer’s market will last into H2 for NCA and NMC battery chemistries. Critical battery materials remain plentiful for now – however, lithium, for example, is likely headed for shortage in 2025.

The year 2023 seemed destined to be a terrible time for both sides of the purchasing equation, with buyers doomed to face the impacts of severe supply disruptions and labor strikes and sellers consigned to managing the effects of a looming recession.