In a recent report submitted to the Western Pacific Fasteners Association, Bruce Darling, Vice President of Material Management at Porteous Fastener in the U.S., provided insights into the 2011 Asian fastener market. The report highlighted ongoing challenges and trends affecting steel prices, production costs, and market dynamics across different regions.
One key point was the continued rise in steel prices within the Taiwan market, alongside a weakening U.S. dollar. Political instability in North Africa led to a civil war, forcing European buyers to make difficult decisions. In mainland China, rising steel and labor costs were major concerns, with only a few plant expansions taking place. Power outages and environmental pollution became critical issues for manufacturers.
At the end of May, China National Iron and Steel Corporation in Taiwan announced price cuts for certain products. While plates and rods remained stable, other items saw overall reductions. For instance, HRC dropped by NT$1,754 per ton, HRC by 1,419 yuan per ton, electro-galvanized steel by RMB1,500 per ton, and electrical steel by RMB2,600 per ton. Hot-dip galvanized sheet also decreased by 1,613 yuan per ton.
In mainland China, the outlook for fastener purchase prices remains upward. Natural disasters in Australia and Brazil contributed to higher iron ore prices. Some industry experts even predicted a potential 66% increase in steel prices for 2011. Darling, however, estimated a more moderate increase of 10-15%, followed by an additional 5-8% later in the year.
Taiwan’s performance in 2010 was better than in 2009, but it still fell short of expectations. A recent steel price increase of 9.3% has raised concerns, with industry insiders anticipating even larger rises in the future. Although the U.S. dollar is currently stable, its previous weakness brought about various challenges.
Darling also noted that Taiwanese manufacturers have been investing in new machinery, though most of these purchases are for replacing outdated equipment. Some companies are shifting toward non-standard parts. North America remains Taiwan’s largest fastener market.
The European market, on the other hand, is becoming increasingly unpredictable. The China-EU anti-dumping cases caused some buyers to turn to Taiwan. However, following a WTO ruling that found the EU's actions violated international trade rules, there is hope that these buyers may return to mainland China if the case is resolved in favor of China.
Looking ahead, Darling predicts that fastener purchase prices in Taiwan will likely continue to rise over the next two quarters. In the following three quarters, prices will depend on how steel prices adjust in the second quarter. Many industry professionals believe that steel prices will eventually decline.
Despite this, demand for fasteners in the domestic market is expected to grow due to the rapid development of high-speed rail and wind power industries. As a result, Darling warned that China’s 100% export of fasteners could face significant challenges in the near future.
Additionally, mainland China is grappling with serious power shortages, which have disrupted steel and fastener production. Pollution is another pressing issue, with many steel mills facing potential shutdowns due to environmental regulations. This could lead to raw material shortages and further price increases. Currently, only a limited number of factories are expanding their operations.
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