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Taiwan Fastener Industry Output Value Drops in Q3 2012

2013/02/18 | By Steve Chuang

USA remains biggest market for Taiwan's fastener exports Jan.-Sept.

Affected by global economic uncertainty, Taiwan's fastener industry saw output value drop 2% to NT$31 billion in the third quarter of 2012 from NT$31.5 billion a quarter ago, according to the latest report from the Metal Industries Research & Development Centre (MIRDC), a local industry research institute.

The report indicates that the industry's exports totaled NT$28.8 billion in the third quarter, down 2% from NT$29.3 billion scored in the second quarter, with imports showing nearly flat growth of only 1% to reach NT$1.2 billion. Demand in the Taiwan market totaled NT$3.4 billion, shrinking 1% quarterly.

For the first three quarters of the year, the industry turned out NT$92.5 billion of fasteners, down 2% year-on-year, with aggregate exports and imports of NT$86 billion and NT$3.4 billion, respectively. In the meantime, domestic market demand reached NT$9.9 billion, about the same as a year ago.

During the span, the U.S. imported 38% of the industry's exported fasteners as the largest buyer, followed by Germany (9%), Japan (6%), the Netherlands (5%), and the U.K. (4%). Notably fasteners exported to Japan commanded the highest average price of NT$98 per kilogram among the five abovementioned countries, according to the MIRDC report. The biggest import supplier was Japan, contributing 51% of Taiwan's needed fasteners, trailed by the U.S. (12%), China (11%), Germany (5%) and the Philippines (4%).

Mixed Results

Reflecting different economic performances in the U.S. and Europe, exports to the industry's two biggest markets also showed mixed results in first three quarters of 2012.

MIRDC's senior analyst says that the recovering real-estate market along with improving employment rate, American economic prospects improved in the third quarter, when the government launched the third round of quantitative easing (QE3), while the country's Manufacturing Purchasing Index reported by the Institute of Supply Management rose to 51.5% in September. As result, Taiwan's fastener exports to the country reached some 420,000 tonnes in the first three quarters, for an 8% growth compared to a year earlier, with average price of NT$76.2 per kilogram, an all-time high.

Dampened by persistently high unemployment and sagging consumer demand in the EU periphery due to the lingering debt crisis, along with weakening German exports that are causing ripple effect throughout the region, where the Economic Sentiment Indicator (ESI) dived for the sixth consecutive month in September, with the EU economy expected to finish 2012 with a 0.4% decline, according to the analyst. Affected by such scenario, Taiwan's fastener exports to the EU plummeted 14% YoY to only 348,000 tonnes at average price of NT$78 per kilogram in the first three quarters.

Industry Headlines

The MIRDC analyst says that the inauguration of the Taiwan International Fastener Show, Tainan, Taiwan, to be held April 11-13, 2013, has operators eagerly anticipating the event to drive the industry to the next level.

Supported by the Tainan City Government and organized by Taiwan Fastener Trading Association (TFTA) and Tainan's Economic Development Bureau, the upcoming show may be designed to ride on the success of another biennial event held in Kaohsiung by the Taiwan External Trade Development Council, a semi-official export promoter, in association with the Taiwan Industrial Fastener Institute, which just wrapped up in March 2012.

The new trade fair is expected to attract 400 exhibitors from home and abroad to occupy some 820 booths over three exhibition halls in the Commercial Exhibition Center of Tainan, to showcase not just fasteners but also related machinery and products, according to TFTA, which plans to invite about 3,000 international buyers and suppliers to make the fair a one-stop sourcing platform.

Meanwhile, MIRDC is keeping a close eye on the acquisition of Infastech announced by Stanley Black & Decker in July 2012, following the previous one of Emhart Teknologies, that will influence the fastener industry in Asia in the short term.

The analyst says that Infastech is headquartered in Hong Kong and engaged in manufacturing and sales of fasteners customized for construction machinery, industrial production, electronics, automotive and aerospace vehicles, while Emhart, located in New York, is also a global company working on fastening and assembly technologies. When Emhart and Infastech merge, the analyst says, Stanley Black & Decker will boost its clout in the Asian fastener industry and market.

Other Highlights

The MIRDC cites other market developments that will benefit Taiwan's fastener makers.

China Steel Corp., a major upstream supplier of wire rods for fastener production in Taiwan, announced in the third quarter that it will continue to reduce domestic price of wire rods by NT$1,800 per tonne October through November, and further cut it by NT$1,300 in December. The price cuts have pumped positive momentum into the fastener industry, a trend especially valuable when orders have slowed significantly for the time being.

Meanwhile, the Chinese government, with a new leadership in place in mid-November 2012, has decided to speed up economic and infrastructural development nationwide, by building high-speed railways, wind turbines, nuclear power stations and aircrafts as part of its 12th Five-Year Plan. This, the MIRDC analyst says, will trigger considerable demand for high-tensile fasteners in the country to profit Taiwanese makers, among which Chun Yu Works & Co., Ltd. and many others have been doing well in China.

Downturn in Q4

In light of economic slowdowns seen in some emerging countries, persistently high unemployment in the EU bloc and an increasingly uncertain global economy, MIRDC predicts the industry's output to keep trending downward to NT$30.8 billion in the fourth quarter from the third quarter, with exports to edge down to NT$28.7 billion.

For the whole year, MIRDC furthered, the industry's output value is estimated at NT$123.3 billion, down 2% from a year ago, with exports and imports to reach NT$114.7 billion and NT$4.7 billion, respectively, down 2% and up 6%.

Taiwan Fastener Industry Output

Period

2011

Q2, 2012

Q3, 2012

Q4, 2012
(forecast)

2012
(forecast)

Value

Value

QoQ Growth

Value

QoQ Growth

Value

YoY Growth

Value

YoY Growth

Output

126.4

31.5

5%

31.0

-2%

30.8

-1%

123.3

-2%

Import

4.5

1.2

10%

1.2

1%

1.3

13%

4.7

6%

Export

117.5

29.3

5%

28.8

-2%

28.7

-1%

114.7

-2%

Scale of Domestic Market

13.3

3.4

7%

3.4

0%

3.5

4%

13.4

0%

Value Unit: NT$1 billion

Source: Metal Industries Research & Development Centre