Taiwan's Machine-tool Builders to Raise Product Prices

Taipei, June 22, 2011 (CENS)--To reflect the increased costs in procuring key parts and components, Taiwan's machine-tool manufacturers are considering raising product prices for the second time since the beginning of this year.

An industry insider said domestic machine-tool manufacturers will raise product prices by over 5%,with the prices for some custom-made products to be hiked by over 8%.

Although domestic machine-tool manufacturers raised product prices in March, they are considering further raising product prices because of the sharp appreciation of local currency against the U.S. greenback in the second quarter of this year. Some makers complained that the prices of such key components as bearings, linear guideways and cast iron have surged significantly and the prices for computer-numerical-control devices will be raised by the end of this year. The price hike in key components and raw materials has momentously eroded the manufacturers' gross profit margin.

Since the beginning of the second quarter of this year, the New Taiwan dollar has risen by NT$0.6 against the greenback. More recently, the selling prices of cast iron jumped by over 10%.

Institutional investors said domestic machine-tool manufacturers saw mixed profitability, albeit the continued growth in sales in the second quarter of this year. Some focusing on the standard machines with U.S. dollar price quotation will suffer bigger impact than others from the price hike in raw materials and the volatility of local currency.

Awea Mechantronic Corp. said the prices of cast iron delivered in early June reached between NT$52 and NT$54 per kilogram, for an increase of between 5% up to 8%. The company has orders of over NT$2 billion in hand, with order visibility transparent through the end of this year. But the company noted its sales performance will depend on whether the supply of bearings and linear guideways is sufficient.

Victor Taichung Machinery Works Co., Fu Chun Shin Machinery Manufacture Co. and Kao Fong Machinery Co. all see order visibility transparent through the end of the third quarter of this year. But they are also suffering from the price hike in cast iron.