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Taiwan Metals Report Q4 2010
Business Monitor International, Oct 2010, Pages: 47
Business Monitor International's 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.
While the Taiwanese steel industry will report strong growth in 2010 due in large part to low base effects, as well as a rebound in domestic and external demand, 2011 will present new challenges with an expected Chinese slowdown undermining sales, according to BMI’s latest Taiwan Metals Report. In the first seven months of 2010, Taiwan’s crude steel output rose 34.5% y-o-y to 11mn tonnes. Unlike other steel producing countries in the region monthly output did not drop off after May, although the industry is still running at 20% below full capacity. Crude production has been shored up by the restart of CSC’s No.1 blast furnace in June, which has 1.9mn tpa production capacity and was closed for maintenance in January. Taiwan Tung Ho Steel was also expected to commission its new Taoyuan plant in Q210, leading to an increase in its billet production output from 1.7mn to 2.1mn tpa. Some local rebar producers have voiced their concerns that the plant will create a situation of over-supply at a time when scrap supply will become tight and feedstock for EAFs will become more expensive.
Growth comes amid an export boom with Taiwan’s iron and steel exports rising 37.7% y-o-y to US$10.7bn in the first eight months of 2010, while its metal product exports rose 44.2% y-o-y to US$6.31bn. Growth continued to be sustained into August with iron and steel exports up 31.2% and metal product exports up 27.2% y-o-y. Meanwhile, imports in the January-August period grew 96.6% yo- y to US$8.28bn in the first eight months of 2010, while its metal product imports rose 79.0% y-o-y to US$7.84bn, leading to a narrowing of the iron and steel trade surplus and increasing the trade deficit in metals products. Taiwan’s rebar consumption is expected to rise 17% to 4.6mn tonnes in 2010, staging a recovery from the dismal performance in 2009 when consumption fell to the lowest level in two decades. According to the statistics, Taiwan’s rebar consumption in 2009 totalled 3.9mn tonnes, falling to the lowest level in past two decades due to recession.
We have revised our 2010 real GDP growth forecast upwards to 9.0% from 5.9% previously. However, our outlook on the Taiwanese economy in 2011 is much more pessimistic, with a real GDP growth forecast of just 1.4%, as we believe that recent supportive economic factors will reverse and low base effects will no longer be in play. As a result, we have revised up our forecast for crude steel output from 18.75mn tonnes to 18.91mn tonnes (up 18.3%), but anticipate a rapid slowdown in output growth for 2011 at 0.5%. Hot rolled production should follow a similar trajectory, growing 21.4% to 19.9mn tonnes in 2010 following a long period of stagnation and decline from 2003. Output will be spurred on by exports, as well as the growing domestic market.
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