Taiwan’s Fastener Production Grows to NT$31.5B. in Q2
2012/11/20 | By Steve ChuangTaiwan’s fastener industry recorded a production value of NT$31.5 billion in the second quarter of this year, up 5% over the previous quarter, according to the latest report issued by the Metal Industries Research & Development Centre (MIRDC).
MIRDC statistics show that the island’s fastener exports amounted to NT$29.3 billion and imports reached NT$1.2 billion in the first quarter, up 5% and 10%, respectively, from the previous quarter. Domestic sales rose 7% to NT$3.4 billion during the period.
The industry chalked up an output value of NT$61.5 billion in the first half of the year, edging up 1% from the corresponding period of 2011. Exports totaled NT$57.2 billion, with 37% of the total going to the U.S., 9% to Germany, 6% to Japan, 5% to the Netherlands, and 4% to the U.K. Exports to Japan enjoyed the highest average unit price of NT$97.4 per kilogram, according to the MIRDC report.
Taiwan’s fastener imports amounted to NT$2.2 billion in the first half, up 7% over a year earlier, and domestic demand grew 3% to NT$6.5 billion. Japan, the U.S., China, Germany, and the Philippines were the top five sources, supplying 51%, 12%, 10%, 5%, and 5% of the total, respectively.
U.S. Market Slowdown
MIRDC analysts predicted that the industry’s exports to the U.S. will weaken in the short term, because American manufacturing industries are likely to lost growth momentum and reduce their demand for fasteners.
The U.S. Institute of Supply Management reported that that country’s PMI (purchasing management index) slid to a three-year low of 49.7 in June, down from 53.5 a month earlier. This was bad news for Taiwan’s fastener exporters, who saw their shipments decline in June. For the first half of the year as a whole, however, exports to the U.S. rose 8% to some 280,000 tons.
The MIRDC analysts said that the lingering EU debt crisis has kept the ESC (economic sentiment indicator) in the euro zone dropping for three months in a row, despite a turnaround in the confidence indexes of the retail and construction industries there. In this gloomy economic climate, Taiwan’s exports of fasteners to the 27 EU member countries dropped 10% to 253,000 metric tons in the first half of this year.
The analysts indicated that the industry’s fastener exports to the U.S. and the EU carried average prices of NT$76.3 and NT$78.1 per kilogram, respectively, during the first half. In 2008, by comparison, the average price was NT$84.4.
Falling Materials Costs
One bit of good news for the industry is the falling cost of wire rods. The China Steel Corp., Taiwan’s largest steelmaker by output, lowered the price of its wire rods by NT$2,000 per metric ton in January and announced another NT$1,300-per-ton cut in September. The MIRDC attributes these moves to a persistent supply glut in the global market.
At the same time, the EU’s punitive antidumping tariff of 85% on certain Chinese-made carbon-steel fasteners pushed EU imports of the affected products down to just 26,000 metric tons in 2011, from a peak of 630,000 tons in 2007. Taiwanese suppliers have stepped in to fill the resulting supply vacuum.
MIRDC analysts noted, however, that this happy situation for Taiwanese fastener manufacturers may not last long. The WTO, which made an initial ruling in July last year that the EU’s antidumping measures violated its rules on international trade, is expected to issue a mid-term investigation report favoring Chinese suppliers soon.
More Decline in Q3
With the ongoing uncertainties in the global economy, especially the slowdown in the U.S. economic recovery due partly to a weakness in manufacturing and China’s drop in growth to a three-year low of under 8% (annualized) in the second quarter of this year, MIRDC analysts are now predicting that that the output of Taiwan’s fastener industry will fall to NT$30.5 billion in the third quarter and that exports will amount to only NT$28.5 billion.
For the year as a whole, the MIRDC forecasts the industry’s output value at NT$121.5 billion, down 4% from 2011, with exports and imports falling to NT$113 billion and NT$4.2 billion, respectively. (SC, Sept. 2012)
Output by Taiwan’s Fastener Industry Unit: NT$1 billion | |||||||||
Period | 2011 | Q2, 2012 | 1st Half 2012 | Q3, 2012 | 2012 | ||||
Value | Value | QoQ Growth | Value | YoY Growth | Value | YoY Growth | Value | YoY Growth | |
Output | 126.4 | 31.5 | 5% | 61.5 | 1% | 30.5 | -8% | 121.5 | -4% |
Imports | 4.5 | 1.2 | 10% | 2.2 | 7% | 1.1 | -6% | 4.2 | -6% |
Exports | 117.5 | 29.3 | 5% | 57.2 | 1% | 28.5 | -8% | 113.0 | -4% |
Domestic Market Scale | 13.3 | 3.4 | 7% | 6.5 | 3% | 3.1 | -11% | 12.7 | -5% |