For­eign or­ders fall for the sec­ond month

The China Post - - LOCAL - BY JOHN LIU

For­eign or­ders fell at an an­nual rate of 5.9 per­cent to US$35.79 bil­lion in May, which was the low­est amount in nearly two years, ac­cord­ing to a re­port re­leased by the Min­istry of Eco­nomic Af­fairs ( , MOEA).

Even the MOEA did not an­tic­i­pate the sub­stan­tial de­cline, said Lin Lee­jen ( ), di­rec­tor of the MOEA Sta­tis­tics Depart­ment. “Or­ders re­ceived in May and June in­deed are not as good.”

Only or­ders for in­for­ma­tion and com­mu­ni­ca­tion tech­nol­ogy (ICT) prod­ucts saw growth — by 2.3 per­cent — in May. Or­ders for elec­tron­ics, pre­ci­sion in­stru­ments, base met­als, ma­chin­ery, plas­tic and chem­i­cal prod­ucts all took a tum­ble — mostly by dou­ble dig­its.

As semi­con­duc­tor fab­ri­ca­tion plants make in­ven­tory ad­just­ments, they re­ceive fewer or­ders in May and June, noted the MOEA.

Due to low oil prices, or­ders for plas­tic and chem­i­cal prod­ucts plum­meted 16.7 per­cent and 11.7 per­cent, re­spec­tively. Or­ders for base met­als dropped 16.5 per­cent be­cause of over­sup­ply and price com­pe­ti­tion car­ried out by other com­pa­nies in Asia.

Or­ders for ma­chin­ery, the ex­pan­sion of which of­ten sig­nals a ris­ing econ­omy, also dropped for the sec­ond con­sec­u­tive month. The re­ver­sal in or­ders is in­deed a con­cern that the econ­omy is slow­ing down, Lin said.

Chi­nese Sup­ply Chains’ Im­pacts

Or­ders placed from China have fallen for five con­sec­u­tive months. In May, the or­ders de­creased by US$1.17 bil­lion, which ac­counted for more than half of the over­all for­eign or­der de­cline.

It ap­pears that sup­ply chains in main­land China have ram­i­fi­ca­tions be­yond Tai­wan’s panel in­dus­try, and have im­pacts felt faster than pre­vi­ously ex­pected.

Tai­wan’s semi­con­duc­tor fab­ri­ca­tion busi­ness re­mains com­pet­i­tive; how­ever, firms fo­cus­ing on in­te­grated cir­cuit de­sign, and pack­ag­ing and test­ing are all now un­der greater pres­sure, Lin said.

As com­pa­nies roll out new mo­bile de­vices, in­tro­duce In­ter­net of Things ap­pli­ca­tions and Win­dows 10 com­pat­i­ble com­put­ers in the sec­ond half of the year, the MOEA projects or­ders for ICT and elec­tron­ics prod­ucts will climb up.

Growth May Slow in the Fu­ture

In the ab­sence of other pos­i­tive fac­tors and high or­ders from the same pe­riod last year, the MOEA is not op­ti­mistic that for­eign or­ders will grow in June. There­fore, for­eign or­ders are likely to see three con­sec­u­tive months of de­cline.

Past records show May and June tend to have sim­i­lar amounts of or­ders. The fig­ure reg­is­tered at US$38.32 bil­lion in June last year.

Or­ders will be some­what re­strained in the near fu­ture by fierce in­ter­na­tional com­pe­ti­tion and fall­ing prices, Lin cau­tioned.

Non-tech in­dus­tries will still be af­fected by low oil prices, petro­chem­i­cal fac­to­ries’ clo­sures for an­nual main­te­nance and the steel in­dus­try’s ex­ces­sive pro­duc­tion ca­pac­ity and fall­ing prices, Lin said.

The amount of or­ders topped US$40 bil­lion in the months be­tween Septem­ber and De­cem­ber last year. Given the high amount of or­ders, the MOEA does not ex­pect high growth rates this year.

CNA

Con­tainer ves­sels ship out ex­ports at a lo­cal har­bor yesterday. Over­seas or­ders to­taled US$35.79 bil­lion in May, a drop of 5.9 per­cent year-on-year, ac­cord­ing to gov­ern­ment sta­tis­tics. Or­ders be­tween Jan­uary and May reg­is­tered at US$180.47 bil­lion, which rep­re­sents a 0.6 per­cent de­cline from a year ago.

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