January 21, 2022

Analysis of China's Fastener Export Situation in the Second Half of the Year

In the second half of the year, the trend of China's fastener export situation has a very large impact on the international environment. Ms. Chang Sihang, general manager of Golden Spider and head of the 4th Guangzhou Fastener Trade Fair Organizing Committee, pointed out: “The future export situation of fasteners in China mainly depends on foreign market demand, changes in RMB exchange rate, European debt crisis, and costs. Stress and other factors."

First, the slowdown in demand growth in foreign markets.

In the first half of the year, export orders showed the trend of “spraying wells” and did not indicate that the foreign markets had fully recovered.

According to a statistics released by the China Federation of Logistics and Purchasing in the latest report, China's Manufacturing Purchasing Managers' Index (PMI) was 52.1% in June, which has continued to fall since April and June has fallen by 1.8 compared to May. The percentage point, which is 3.6 percentage points lower than that in April, means that although the economy is still growing, the growth rate has already begun to drop sharply since the watershed of April, and it has begun to approach the 50% balance point that indicates the strength of the economy. Economic growth is slowing down.

In addition, the recently released data shows that the economic outlook of Europe and the United States is facing a great downside risk, especially the reduction of inventory coverage. From May to June, the PMI new orders and shipping index in Philadelphia and New York dropped sharply from March to April, and the inventory expectations index fell for two consecutive months. The effect of the US's restocking effect slowed sharply; and the euro zone June The PMI was 55.6, slightly lower than May. As for the surge in export orders in the first half of the year, it is likely that foreign importers will have too many inventories and the market will become saturated. It will take time to digest the inventory. At the same time, the European debt crisis will further affect the growth of demand in the European market in the future, which will adversely affect the export of fasteners in China.

The second is the revaluation of the renminbi in the second half or restart.

Although the renminbi has repeatedly resisted the pressure of appreciation of international requirements and strived to maintain the relative stability of the exchange rate, even if "long-awaited," the appreciation of the renminbi will always be an inevitable trend. "From this year's point of view, the most likely appreciation is around 3%," said the Yingjun branch of the International Business Division of the ICBC branch. In addition, the European debt crisis may also result in a substantial depreciation of the euro, resulting in an appreciation of the renminbi against the euro, thus affecting China's exports to the euro zone.

"If the RMB appreciates 15% against the euro, China's exports to the euro zone will drop by about 10 percentage points, which means that China's overall exports will drop by 1.4 to 1.6 percentage points. If you consider other countries are already clearly visible to the dollar, The devaluation, and thus the impact on China's exports may be even greater." Industrial Bank senior economist Lu political commissar of the analysis.

The third is the cost factor.

Cost factors also have a certain influence on the future export of fasteners. As a result of inflation, domestic raw material prices have risen, and wages for workers have risen, which has greatly increased the manufacturing costs of Chinese fasteners. Although in June, the purchase price index was 51.3%, down 7.6 percentage points from the previous month, indicating that inflationary pressures eased and corporate cost pressures eased. However, inflationary pressures still exist, and Dong Xianan, chief macro analyst of Industrial Securities, believes that all industries will face periods of both inventory and cost pressures. As for the fastener enterprises, although the steel prices have recently declined, but when the steel prices bottomed out, the fluctuations in the prices of steel and other raw materials are still affecting each of their nerves.

Therefore, the situation is particularly complex in the second half of this year. The above-mentioned uncertainties make the future export of fasteners very risky. It is expected that the growth rate of China's fastener exports will slow or slow down in the second half of the year.

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