In December 2024, Walsin Lihwa, one of Taiwan’s prominent stainless steel wire rod and cable manufacturers, reported a year-on-year revenue decrease of 0.93%, totaling NT$13.66 billion for the month. The company's full-year revenue for 2024 amounted to NT$179.2 billion, reflecting a more significant decline of 5.74% compared to the previous year. These figures highlight the challenges the company has faced in a fluctuating global market. Despite a mixed performance in its core sectors, Walsin Lihwa continues to plan strategic expansions, including a major new facility in Indonesia set for completion in 2027.
Business Segments Performance
Wire and Cable Sector
Walsin Lihwa’s wire and cable business provided a buffer amid the company’s overall decline. Benefiting from the Taipower Grid Resilience Strengthening Construction Plan, the sector saw stable demand, particularly from the construction of power grids and factories. Taipower, Taiwan's state-owned electric utility, has been actively upgrading its grid, which positively impacted the demand for wires and cables. As a result, Walsin Lihwa was able to maintain steady profits in this segment.
The demand for wire and cable products also received support from Taiwan’s growing factory construction sector. This stability in the wire and cable business, especially driven by infrastructure needs, helped offset declines in other areas of the company’s portfolio.
Stainless Steel Business
The stainless steel segment, however, faced a more complicated environment. Demand for stainless steel in Taiwan remained largely flat throughout 2024, and China’s demand was notably weak, contributing to overall challenges in the market. Chinese demand for stainless steel has long been a significant factor in the global market, and its weakening posed challenges for many manufacturers in the region, including Walsin Lihwa.
On a brighter note, the company observed signs of a gradual recovery in Europe and the United States by the fourth quarter of 2024, where stainless steel demand began to pick up. The US and Europe’s demand recovery in the latter half of 2024 provided some relief to Walsin Lihwa’s stainless steel business, but the weak performance in Asia was a major concern.
Resources Business
Walsin Lihwa’s resources business, which focuses on mining and trading essential materials like nickel, faced external pressures. In particular, Indonesia’s decision to release nickel ore quotas and the evolving political situation in the country had a substantial impact on the business. The company expects the resources sector to improve in Q1 2025, as the impact of these changes in Indonesia begins to stabilize. However, the delay in this improvement contributed to the overall revenue decrease for 2024.
Strategic Expansion: Indonesian Plant
Looking ahead, Walsin Lihwa is preparing for a significant expansion with the Indonesian stainless steel wire rod plant, set to begin mass production in 2027. The plant will have an annual output capacity of 300,000 metric tons, focusing primarily on supplying the Southeast Asian and South Asian markets.
Indonesia has become a critical hub for nickel mining and stainless steel production due to its abundant resources, making it a strategic location for Walsin Lihwa’s long-term growth plans. By establishing a presence in Indonesia, the company aims to capitalize on regional demand, tapping into the growing markets of Southeast Asia and South Asia, which have shown signs of significant development in manufacturing and infrastructure.
Political Influence and Nickel Quotas
The Indonesian nickel market has been heavily influenced by the release of nickel ore quotas, a decision that has far-reaching implications for stainless steel production. The quotas, while beneficial in terms of providing material access, have been volatile due to shifts in the country's political environment. The company expects improvements in this sector to begin in early 2025, with better access to resources and a more stable political climate. This move aligns with Walsin Lihwa’s broader strategy to diversify its operations and reduce dependency on Taiwan’s domestic market alone.
Global Market Trends and Challenges
The decline in revenue also highlights the broader global economic uncertainties impacting the stainless steel and wire rod markets. Trade tensions, especially between major economies, as well as fluctuations in raw material prices, have created challenges for companies like Walsin Lihwa. The company has had to navigate these issues, including the rising costs of raw materials and changing demand patterns in different regions.
Additionally, the evolving demand trends in China and other emerging markets have forced the company to adapt quickly. With China's slowing demand for stainless steel and the EU/US markets recovering more slowly than expected, Walsin Lihwa's strategy to rely on diverse geographies for growth becomes even more critical.
Future Outlook and Plans
Walsin Lihwa’s outlook for 2025 appears cautiously optimistic. The company is anticipating a recovery in its resources business in the first quarter of 2025 and continues to prioritize expansion into Southeast and South Asia. The Indonesian plant is expected to be a cornerstone of the company’s future growth, helping it tap into the burgeoning demand for stainless steel in the region.
While the company has faced headwinds in 2024, especially with the weak demand from China and challenges in raw material costs, its ongoing investment in international expansion and strategic diversification provides a positive signal for the future. Walsin Lihwa’s ability to adapt to changing market dynamics and to expand its global footprint will be key factors in determining its success in the coming years.
