Asian fastener manufacturing cost up Demand still strong
Bruce Darling summed up the 2011 Asian fastener market for the Pac-West Fastener Association: Taiwan: steel is rising, the dollar is weak, Northern Africa is in civil war and Europe is unsure where to buy. China: Steel and labor prices are up and there is little plan expansion. Electricity and pollution are major problems.
“In Taiwan business in 2010 was better than 2009,” the vice president for materials management at Porteous Fastener Company said. “If 2011 does not pick up, there will be fall out.”
“The latest round of steel prices—at 9.3%—was significant and already there is talk of larger increases to come,” Darling said. The US dollar is steadier at the moment, but during its weak period “has been causing problems.”
There has been some equipment expansion—most replacing old equipment but some parts formers that allow Taiwan to move more into specials. North America is still the largest market for Taiwan fasteners, Darling noted.
Europe is hard to predict, “Anti-dumping duties against China have shifted some business to Taiwan, but the WTO has ruled the anti-dumping duties were calculated wrong and broke international trade rules,” Darling said. “If removed, the volume will go back to China.”
Darling predicted higher prices from Taiwan in the next quarter and the following quarter could climb higher depending on the Q2 steel price announcement. “Everyone believes steel prices will eventually come down, but each quarter they push those predictions forward.”
In China “all the indicators point to higher prices,” Darling said. Flooding in Australia and Brazil hiked iron ore contracts. “There are rumors that steel will increase 66% in 2011,” Daring reported. “However, we see price increase in the 10% to 15% range for the immediate future, with another 5% to 8% for the remainder of the year.”
Electricity is an issue during hot months with rolling blackouts shutting production temporarily. “Pollution is a major government issue and is causing the closure of production at many steel mills, contributing to a shortage of steel and increase of prices,” Darling observed. There is little plant expansion in China, he noted.
There is growing demand for fasteners with the fast development of high speed railroad and wind power in China. Darling said fastener factories that are 100% export “are having a difficult time.”