Insight

Welcome to the 2024 Janus Perspective, a unique feature that includes a wide cross section of global fastener business leaders. Named after the Roman God 'Janus' – who had the ability to look to the future and to the past, and was often depicted with having two faces – this feature brings together thought leaders from every facet of the industry, from around the world, to give us their retrospective on 2023, as well as prospects and challenges for 2024.

Fastener World Magazine

For this Janus Perspective we will analyse the latest Taiwan fastener export data for the first ten months of 2023, followed by overviewing global economic outlook indicators, combining it with the views of Taiwanese manufacturers, to build an outlook for the Taiwanese fastener industry in 2024.

On quarterly data (Figure One), redirected orders upped Taiwan fastener export weight to 1.55 million tonnes in 2022, a record high. However, by looking closely you will find the beginning of a decline in the two quarters of H2 2022 of which the export weight was less than in H2 2021. This is when Taiwanese manufacturers had mixed feelings, as they felt great about a swarm of incoming orders, but they could already foresee the over piling of goods at customers’ warehouses in 2023. 

The export weight in the first three quarters of 2023 totaled 904,000 tonnes, down 25.14% when compared to the same period in 2022 – with Q3 of 2023 in particular experiencing a new low of 287,364 tonnes.

By product types, all of the main fastener categories fell by double digits in export weight in the first 10 months of 2023 (Table One).
Self-tapping screws and bolts had the largest drop (29.05% and 28.02% respectively). Export price growth was relatively minor with wood screws and nuts price showing the largest decline at only 3%, reflecting the pressure of price competition upon Taiwanese companies.

When it comes to export destinations, the ‘Top 5’ destinations for Taiwan’s fastener export in the same period were the USA (489,000 tonnes, down 24.97%, accounting for 45.9%), Germany (86,000 tonnes, down 31.66%, accounting for 8.09%), the Netherlands (72,000 tonnes, down 9.97%, accounting for 6.82%), Japan (43,000 tonnes, down 27.48%, accounting for 4.07%), and Canada (31,000 tonnes, down 32.92%, accounting for 2.99%).

Global economic outlook

When looking forward to the outlook for 2024 there are three key indicators – GDP, PMI and interest rate. Firstly, the IMF upped the USA’s GDP and kept Japan’s GDP flat, indicating that the USA and Japan will lead global economic growth in 2024. Taiwan’s GDP growth rate for 2024 has also been upped to 3.15%.

Meanwhile, the Taiwan Directorate General of Budget, Accounting and Statistics indicated that Taiwan’s economy bottomed out in the third quarter of 2023 and will perform better in 2024. In Europe, and ASEAN, the GDPs have been revised downward. Nevertheless, both GDPs in 2024 are still higher than the ones in 2023, meaning that both market situations will improve.

Regarding PMIs, the indices of the USA, EU, Taiwan, China, and Vietnam, are in the range of 44 to 49, while ASEAN and India have reached above 50. This would suggest that many parts of the world are about to emerge from recession, as PMI values above 50 indicate a period of prosperity.

From October 2023 onwards, inflation has also cooled in Europe, the USA and China. The fall in oil prices has driven inflation down faster in many countries. In addition, interest rate hikes in Europe and the USA are coming to an end, and interest rate cuts are already underway in southeast Asia and South America. Europe will possibly cut the rates in the first quarter of 2024 and the USA will possibly do so in the second quarter, according to Taiwan CSC.

Taiwanese manufacturers’ perspective

So how do Taiwanese fastener giants view the market? Mr Yong-Yu Tsai, president of Jinn Her Enterprise, said he has never seen the economy this bad in his 45 years of fastener business – with the company’s electricity bill alone increasing TW$4 million (€117,000) a month. “This is the worst time ever, but it also means a beginning for the best time,” he said. He recalled when shipping costs peaked, there were overseas buyers who would choose air shipping, which was more expensive, just to obtain fasteners from Taiwan. In that regard, he suggests knowing that “the important thing about fasteners is their value, and price competition is not what is needed”. He suggests running the business on strategies that provide high value added products.

Other Taiwanese owners told Fastener World that they are facing higher salary expenditure, challenges in obtaining factory land and higher land cost, as well as talent outflowing to high-tech industries. They are also under pressure from overseas customers who want them to set-up new factories outside of Taiwan, as war sentiment lingers between Russia and Ukraine and in the Taiwan Strait. Therefore, many Taiwanese owners have set-up factories in Vietnam, Thailand and other places, hoping that customers can purchase with peace of mind.

Taiwanese fasteners in 2024

Overall, Taiwanese owners believe the market will ‘bottom out’ in 2024, with some predicting that Taiwan fastener exports will start to return to normal in the second half of the year. However, a bigger challenge lies in front of Taiwanese manufacturers – the EU’s Carbon Border Adjustment Mechanism (CBAM) regulation.

With CBAM currently in its pilot phase, issues with oil, gas, water, and electricity, are out on the table, and the Taiwanese fastener industry is actively meeting regulations to produce environmentally sustainable products.

So far, no other Asian countries have been as actively involved in compliance to CBAM as much as Taiwan has within the fastener industry. The Taiwanese government has commenced CBAM counseling programs and established communications with the European Fastener Distributor Association (EFDA) and the National Fastener Distributors Association (NFDA) in the USA. The aim is for Taiwanese fastener manufacturers to be at the forefront of carbon reduction in Asia, making them even more attractive to European and US customers. 

That is why many companies are already actively carrying out carbon inventories and optimising their manufacturing processes, hoping to seize the first opportunity in low carbon emission fasteners, especially when the global economy turns around.