Remember last year’s catastrophic floods in Thailand? The disaster struck last summer and wrecked havoc on Thailand’s industry and infrastructure, causing more than $45 billion in damages.

Half a year later, the HDD market is still struggling to recover. Several plants were affected and as a result HDD prices soared in Q3 2011. Analysts expected the market to recover by the end of the current quarter, but it seems they were overly optimistic.

IHS iSupply now estimates that HDD manufacturing will continue to recover throughout 2012, but the recovery is going slower than expected due to supply constraints. Of course, the slow recovery will have an effect on retail prices.

“HDD prices will remain inflated and inventories will continue to be depleted, showing that demand is exceeding supply. Supply and demand should return to balance by the end of the third quarter," said analyst Fang Zhang.

IHS estimates that hard drive prices will remain inflated throughout 2012, although they are projected to decline by 3 percent and 9 percent in Q1 and Q2 respectively.

More here.