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Taiwan Metals Report Q2 2010
Business Monitor International, April 2010, Pages: 53
Taiwan Metals Report provides industry professionals and strategists, corporate analysts, metals associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Taiwan's metals industry.
The Taiwanese steel industry is set to make a strong export-led recovery in 2010, stimulated by exports to China that should be encouraged by growing trade links with the mainland, according to BMI’s latest Taiwan Metals Report.
In 2009, Taiwan’s crude steel output declined 22.1% year-on-year (y-o-y) to 15.75mn tonnes, an outcome that was less severe than the 25.9% decline to 14.98mn tonnes we envisaged in the previous quarter. According to figures released by Taiwan Ministry of Finance, Taiwan’s iron and steel exports totalled US$12.32bn, down 32.5% y-o-y, while its metal product exports totalled US$7.03bn, down by 29.5% yo- y. In December 2009, Taiwan’s iron and steel exports decreased by 1.4% y-o-y to US$1.15bn, while its metal product exports increased by 33% y-o-y to US$688.3mn. Meanwhile, Taiwan’s iron and steel imports in December totalled US$908.3mn and its metal product imports amounted to US$758.9mn, up 63.7% and 64.6% y-o-y respectively.
Improved performance in Q409 helped offset part of the decline seen in the rest of the year, with quarterly output up 9.6% y-o-y and 30.7% q-o-q to 4.81mn tonnes. Output was stimulated by export demand from China, where government stimulus programmes help boost the petrochemicals market, which prompted CSC to resume operations of a 3mn tonnes per annum (tpa) blast furnace earlier than planned due to steady global prices as inventories were depleted after a pick-up in demand. The No.3 blast furnace was shut in mid-April for maintenance and was reportedly due to commence output from late August, some weeks earlier than scheduled. Recovery in the Chinese economy has buoyed the Asian steel markets and fears have turned from the potential long-lasting impact of the financial crisis to the possibility of a glut in supply. A longer-term concern that strongly permeated this quarter is that renewed lending in Chinese financial markets may cool as the effect of the stimulus package fades, impacting markets such as Taiwan.
China is the key to the revival of Taiwanese output. There is a consensus that China’s steel market is headed for a period of lower rates of growth as it adjusts from the imbalance between production and demand, oversupply and bounded export, as well as government policies aimed at economic structural adjustment. A likely trade agreement with China in 2010 could enhance Taiwan’s steel trade. Domestic demand is also growing, with Taiwan’s industrial production climbed for a fourth consecutive month in December 2009, boosted by rising orders for electronics components, computers and mobile phones. Stocks had depleted by mid-2009, also prompting a rise in domestic orders.
By 2014, output should reach 20.22mn tonnes, close to 2008 levels. However, a projected improvement in steel prices should see production in value terms reaching US$18.52bn, a rise of 3.9% over 2008. Hotrolled production will recover to near 2008 levels of 21.85mn tonnes in 2014, utilising more imported feedstock. Output growth should be stimulated by exports as the Chinese market continues to revive, while the domestic market will lag behind. On the strength of Chinese-led regional demand, as well as China’s fiscal ability to continue stimulus spending if necessary, BMI has revised up its export forecast and now expects Taiwan to exceed the 2007 peak by the end of the forecast period, with 11.75mn tonnes exported, up 20.6% over 2008 levels.
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