Taiwanese Re-rolled Steel Mills Hold Optimistic Outlooks in Q1

With prospects of the global steel market brightening for various reasons, Taiwanese suppliers of re-rolled steel, a camp including Yieh Hui Enterprise and Sheng Yu Steel, are generally optimistic about their performance in the first quarter of this year.

Institutional investors expect a strong first quarter for Taiwan's steel industry this year based on the order strength enjoyed by most re-rolling companies so far. Upstream steelmakers, such as China Steel Corp. and Chung Hung Steel Corp., have also benefited from the trend.

Yieh Hui's directors indicated that global demand for re-rolled steel market in the first quarter has been boosted by the more costly steel ore, price hikes by American steel mills and higher demand in Europe due to a stabilizing economy. They predicted that these trends would contribute to strong profits for Taiwanese re-rolled steel companies in Q1 this year so long as upstream cost fluctuations can be contained.

Echoing Yieh Hui's optimism, Sheng Yu forecast that the stabilizing global economy would revive demand and stem the down-spiral of international steel prices in the short term, helping Taiwan's steel industry to rebound in the first quarter.

Yieh Hui and Sheng Yu both plan to capitalize on the market recovery by expanding output targeted at the Southeast Asian market.

Yieh Hui is building an NT$10 billion mill to produce cold-rolled steel sheets for automobiles in Changshu, eastern China. The plant will have an annual output capacity of 400,000 to 500,000 tons when it becomes operational in the second half of this year. The plant aims to tap the city's new-car market, where about 700,000 units are sold annually, as well as meet demand in Southeast Asia.

Sheng Yu and its Japanese parent company, Yodogawa Steel Works, Ltd., recently inaugurated an advanced coating and painting factory in China's Hefei City. The NT$10 billion plant has an annual capacity of 300,000 tons. The joint venture will supply local household appliance manufacturers and export to the Southeast Asian market.

Both companies emphasized that their China production lines will help them explore the Association of Southeast Asian Nations (ASEAN) market since exports from China–an ASEAN Plus Three member since 2011—enjoy a lower tariff rate than the 15% duty levied on products from Taiwan. (SC)