BUKIT MERTAJAM: Steel fastener producer Chin Well Holdings Bhd is planning a regional expansion next year.
“We have enquiries from customers for more of our new fasteners that are made in Vietnam. We will add more production lines in Vietnam to cater to the rising demand,” group executive director Tsai Chia-ling told StarBiz.
Tsai said the demand should be strong as the new fasteners could speed up construction work.
On Europe, which contributes about 50% of revenue, Tsai said the company was now negotiating with three important customers for its do-it-yourself (DIY) fasteners.
“We aim to have at least a DIY customer in each European country by 2019.
“We are targeting for the DIY segment to generate about 25% of the group’s revenue in 2019, compared to 15% now,” Tsai added.
Construction activities have picked up in Europe very recently, she added.
On the shortage of raw materials, Tsai said due to the shortage, the price of steel-based raw materials has shot up by 100% since June 2017.
“There is now a shortage of graphite, an essential ingredient used for stabilising the temperature in the furnace used for producing steel-based products.
‘This is on top of the problem in China, where the government is closing down all the cottage industries using archaic technology to produce steel in a nationwide effort to curb pollution,” she added.
Tsai said the company was well prepared to confront the shortage issue.
“We are well stocked on cold-rolled coils which were obtained on competitive prices due to the large amount we order.
“We have adjusted the pricing of our fasteners accordingly to the hike in raw material prices,” she said.
Two of the subsidiaries, Chin Well Vietnam and Chin Herr Industries, which contribute about 50% to the company’s yearly revenue, will continue to fuel the growth for the financial year ending June 30, 2018.
“In Europe and the United States, the demand for our value-added DIY fastener products is rising yearly, riding on a double-digit percentage growth.
“We have locked in sales from a US company operating in the northern region for our fencing and wire-mesh products,” she added.
The company has started to increase gradually its production of grill mesh in Bukit Minyak since April to 450 tonnes a month from the current 300 tonnes.
“This is slightly more than a third of its installed capacity of 1,200 tonnes a month.
“In Vietnam, due to the rising sales of DIY fasteners, we are also looking at increasing the capacity for DIY fastener products,” she said.
Tsai said the sales from the DIY and wire mesh divisions should achieve a double-digit percentage growth for the 2018 fiscal year.
On the labour shortage, the company expects a new batch of foreign workers to come in next month.
According to Zion Market Research, the global industrial fastener market was valued at US$84.9bil last year, and will reach US$116.5bil in 2022.