Chin Well expects slower export sales this year
Resource from: The Star Online Likes:128
May 05,2016
GEORGE TOWN: Chin Well Holdings Bhd, one of the world’s largest manufacturers and suppliers of carbon steel fasteners, expects lower export sales this year as the company loses market share to China-made products.
Group executive director Tsai Chia-ling told StarBiz that the group expected at least 10% decline in sales due to competition from China.
Since February 2016, China-made fasteners are allowed once more to enter Europe without having to face anti-dumping duty.
Tsai said that some of the customers had started buying from China because the fasterners were priced 15% lower than the market price.
“The China competition has exerted downward pressure on pricing.
“But because wire-rod cost, an essential raw material of fastener production, has risen significantly since March 2016, it is very difficult to maintain low selling prices.
“We may have to adjust our prices upwards to pass the cost to customers,” she added.
According to Tsai, the contribution from Europe would be 45% for the 2016 fiscal year ending June 30, compared with 56% in 2015, due to the competition from China.
“The do-it-yourself (DIY) division is expected to contribute about 25% of the revenue for the 2016 fiscal year, compared with 18% a year ago.
“The DIY customers are from the UK and Germany,” she added.
The group’s DIY fasteners are produced in Vietnam which generates about 3,500 tonnes of fasteners monthly, of which about 30% are DIY fasteners.
On its fencing products, Tsai said the orders for fencing materials had improved compared with the first half of 2015.
The fencing products are produced by Chin Herr, a wholly-owned subsidiary of Chin Well.
“The orders started to come in late last year.
“Now the order book for fencing materials is filled till the end of the 2016 fiscal year.
“This will help Chin Herr’s contribution to the group to increase to over 30% this fiscal year from 20% in 2015.
“The fastener output for the group should hit around 105,000 tonnes for the 2016 fiscal year, compared with 108,000 tonnes in 2015,” she added.
According to a report from Transparency Market Research on industrial fasteners, the global industrial fasteners market is progressing at a compounded annual growth rate of 5.40% between 2012 and 2018.
The global fastener market valued at US$65.5mil in 2011 is expected to reach US$94.6bil by 2018.
According to the report, the rise of construction and maintenance activities are expected to boost the demand for fasteners in the coming years, with construction achieving the biggest rate of growth at compounded annual growth rate CAGR of 9% or more from 2012 to 2018.
“Construction fastener demand is expected to be highest on account of rising construction activities in Asia-Pacific.
“Renovation and restructuring activities in mature markets of North America and Europe are expected to contribute significantly to the demand for fasteners in construction,” it said.
(The Star Online)
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