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Taiwan's Surface-finishing Industry Sees Output Surge 13% to NT$163.5 B. in 2011

2012/05/30
Mainly driven by robust demand, Taiwan's surface-finishing industry ended 2011 with output of NT$163.5 billion for a 13% increase from a year ago, according to a report by the Metal Industries Research & Development Center (MIRDC), a metal market researcher in Taiwan.

The report shows that the industry exported NT$78.5 billion and imported NT$15 billion of coated steel plates in 2011, up 5% and down 16%, respectively, compared to a year earlier, with the market in Taiwan expanding 14% to NT$100 billion.

In the fourth quarter, the industry's output value came to NT$41.1 billion, up 12% from a year ago but down 3.6% from a quarter earlier, with exports and imports totaling NT$20 billion and NT$3 billion, respectively, up 5% and down 7% QoQ. The MIRDC analysts stressed that the industry in the fourth quarter produced less than the third quarter for a variety of reasons, including the lingering EU debt crisis and cutthroat underselling among Japanese and Korean steelmakers, which shook the steel market to dampen demand for surface finishing services.

Japan and China were the top two suppliers for the industry in Taiwan, commanding nearly an 80% share of the segment in the quarter; while China, the U.S., Thailand, Indonesia and Malaysia absorbed 50% of the industry's exports as the top-five buyers.

Many industry operators scrambled for orders amid lukewarm demand in the latter part of the year, having already reduced export quotations to attract customers, while stepping up production streamlining since December to sustain operating performance.

Trends
Despite a suddenly down-turning market in the fourth quarter, a few Taiwanese operators from different sectors still invested to boost output of coated steel and electroplated products, with others working hard on technological upgrades that can help to enhance growth momentum in case surface finishing exports recover in the near future, said the MIRDC analysts.

Sheng Yu Steel Co., Ltd. and its Japanese parent, Yodogawa Steel Works, Ltd., jointly invested US$299 million (NT$9 billion) to set up a steel coating factory in Hefei, Anhui Province, eastern China, spread over 127 hectares in the Hefei Economic and Technological Development Zone, with a continuous hot-rolled galvanizing line and coating line, as well as annual output of 312,000 and 201,600 metric tons, respectively, which is scheduled to start trial production by April 2013, said the analysts.

The new factory, 60% owned by Yodogawa and the remainder by Sheng Yu, will target the Chinese market of high-end PCM (pre-coated-metal), color-coated steel sheets, a staple item to make housings of household appliances. The joint venture, the first between the two parties overseas, marks Sheng Yu's entry into China's market for coated steel, said the analysts.

Meanwhile, the Tong Yang Group, the largest supplier of auto body parts in China by output, also established a new subsidiary in Hubei Province, northern China, with approved paid-in capital of US$8 million (NT$243 million), to focus on electroplated auto parts with annual output of 450,000 sets. This is the group's 18th plant in China that is designed to supply major, local carmakers as Dongfeng Nissan, Zhengzhou Nissan and a joint venture between Guangzhou Auto and Mitsubishi Motor, said the analysts.

An improved surface treatment technology for aluminum materials jointly developed and introduced by Long Standard Precision Industries Co., Ltd., a Taiwanese precision mold developer, and MIRDC in late 2011 will also help to further build Taiwan's global profile in the surface finishing industry, added the analysts.

The above treatment technology was developed by the two parties using the PVD (physical vapor deposition) process and ion source technology, with such improved technology mainly applied in the production of aluminum cassettes to reduce friction between the surfaces of ICs (integrated circuit) and cassettes during transfer in packaging. So far, the MIRDC analysts confirmed, Long Standard has used the technology to develop cassette molds, which will not only sharpen the surface treatment industry's competitive advantage, but also help IC packagers to raise production efficiency.

Trend-setter
The MIRDC predicts that making car coating and paints incorporated with nanomaterial will become a trend-setting technology in the global surface treatment industry, adding that such materials in nano-dimensions have special, value-added morphological features than in microcrystal sizes, and are hence being extensively researched for different applications.

For instance, metallic paints infused with nano-TiO2 (titanium dioxide) are chromatically brighter, more vivid when applied on car bodies than conventional paints, and hence are increasingly popular among car owners worldwide. Additionally, nanomaterial-infused paints also enhance resistance against ultraviolet rays and degradation, as well as durability and flexibility. Thus, the MIRDC analysts advise Taiwanese companies focus on development of nanomaterial-infused auto paints to tap the product's potential.

Outlook in 2012
The MIRDC analysts predict a robust outlook for the industry in 2012, partly due to the gradually stabilizing global steel market along with bottoming out prices, and partly due to steadily growing demand for new cars, smartphones and ultrabooks to drive manufacturers' needs for surface finishing services and coated sheet-metal.

The MIRDC is especially ebullient about the fast-growing smartphone market in China, emphasizing that the annual compound growth rate of the market in 2001 through 2014 is estimated at 64%. Based on such data, the MIRDC believes budget-priced models will lead the surge to generate more business opportunities for Taiwanese surface finishing companies in the future.

So the MIRDC analysts project that the industry's output value to increase 8.3% year-on-year to NT$41.9 billion in the first quarter of 2012, and reach NT$168 billion for the whole year for a 3% YoY growth.
(SC, May 2012)

Output Value of Taiwan's Surface Finishing Industry

Period

2010

2011

2012
(forecast)

Q4
(estimated)

Full Year
(estimated)

Q1

Full Year

 

Value

Value

Y-on-Y Growth

Value

Y-on-Y Growth

Value

Value

Output

144.8

41.1

12%

163.5

13%

41.9

168.0

Export

75.1

20.0

5%

78.5

5%

21.0

81.3

Import

17.8

3.0

-7%

15.0

-16%

4.2

16.3

Scale of Domestic Market

87.6

24.1

15%

100.0

14%

25.1

102.9

Value Unit: NT$1 billion
Source: Metal Industries Research & Development Center

(by Steve Chuang)
 
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