[2019 industry highlights] Screw exports to Europe and the U.S. in the third quarter have dropped, screw businesses hold different opinions
- Online Date: 2019/11/05
- Modify Date: 2019/11/05
Source: Taiwan Industrial Fasteners Institute Monthly Issue 392
Published on: October 25, 2019
Written by: Steel News Network, Yen-Jung Chen
According to Taiwan's customs data, the number of screws exported in the third quarter of this year was down 3 percent from the second Quarter. Of these, exports to the United States declined by 2 percent and exports to Europe by 5 percent. Screw businesses believe that raw material costs account for a high proportion of the quotes for screws, affecting the competitiveness of the industry. The nominal price of wire rods from China Steel should have dropped in the second quarter of this year, but didn't. This caused a deviation between the prices of local materials and the international market, resulting in the loss of orders for Taiwan's screw industry. However, some businesses consider that the decline in overall demand isn't entirely due to steel prices and the global situation this year. When demand shrinks, low pricing quotes may not generate orders.
According to Taiwan's customs data, screw exports in the third Quarter of this year were about 386,435 tons, a decrease of 3 percent from 399,550 tons in the second Quarter and a decrease of 9 percent from 425,902 tons in the same period last year. In terms of exports to Europe and the U.S., a total of 169,004 tons were exported to the U.S. In the third Quarter of this year, this represents a 2 percent decrease from 174,005 tons in the second Quarter and a 4 percent decrease from 176,718 tons in the same period last year. A total of 125,477 tons were exported to Europe, 5 percent lower than the 133,232 tons in the second Quarter, and 14 percent lower than the 146,952 tons in the same period last year.
Screw businesses believe that Taiwan's screw prices affect the competitiveness of export sales, especially since raw material costs account for 40 percent of the product's price. If raw material costs are too high, the ability to secure orders weakens.
When nominal prices in the global market fell at the beginning of this year, China Steel's prices did not, causing local materials to deviate from international markets. At the time, the price difference between Chinese Steel and Ha Tinh was nearly NT$5,000/ton. Many export customers purchased from Vietnam instead, which caused Taiwan's screw industry to lose orders. The industry believes downstream businesses can take orders on the market when there is demand in the market and prices have not been reduced. It was too late for steel factories to cut prices in the third Quarter; downstream screw companies had already lost their competitiveness.
One business said China Steel's recent prices are close to that of Ha Tinh. In the case of China Steel's price project (approximately NT$17,500/ton) The price difference between Chinese Steel and Ha Tinh dropped to NT$1,500/ton, but using price projects may not be good for the overall market.
If large manufacturers still have the ability to take on projects, but small factories have difficulty digesting inventory, there will be no room for projects, and the goodwill shown by steel factories may not be beneficial. More recently, screw factories have high inventory levels and low export order volume. Market conditions in the first Quarter of next year aren’t estimated to improve.
However, some businesses believe that the impact of the global situation this year has caused demand to decline. It is not entirely a matter of steel prices. Orders may not be placed if terminal demand does not return to its previous level, even if prices are low. Moreover, the screw industry is not the only industry with poor performance, various other industries also performed poorly. Businesses cannot control the situation, they can only keep fighting and wait for market demand to return.