Taiwan's metalworking industry urges ban on steel exports

Taipei, March 9, 2004 (CENS)--More than 100 metal processors and hardware manufacturers from central Taiwan recently formed the Taiwan Metalworking Industry Alliance and will muster over 50,000-strong relevant firms to request the government tentatively prohibit Taiwanese steel makers from exporting their products.

The alliance will take to the streets calling for the government to take the same actions adopted by South Korea and mainland China to temporarily ban exports of domestically made steel products, so as to stabilize steel prices. The alliance said prohibition of steel exports will salvage downstream steel firms because they are encountering supply shortage of steel as production material. Some downstream firms said they are facing a shutdown crisis as their production costs are sharply rising along with the surge of steel prices. For instance, a manufacturer of nuts and bolts located in southern Taiwan is said to have seen an NT$600 million (US$18.01 million) check bounce up.

Tsai Chang-ming, chairman of the alliance and president of Huei Tyng Enterprise Co., Ltd., said South Korea and mainland China have temporarily stopped exports of steel products to meet urgent need of domestic downstream firms and stabilize steel prices. He complained Taiwan at present still exports 40% of steel output, leading to a short supply of the products.

Tsai said many domestic furniture manufacturers dared not to accept orders when attending the Singapore International Furniture Show recently because they failed to precisely quote prices in fear of continued surge in production costs amid the rising of steel prices.

A domestic hardware producer said there are over 20,000 firms producing metal products in Changhua County of central Taiwan, and some of them claimed they have seen April and May orders canceled by customers for higher quotation prices.

Tsai said many domestic makers of building materials, personal computers, household decorative products, furniture, hardware, bicycle parts and sports equipment, are directly or indirectly procuring steel as materials from the CSC. Thus, a stable supply of CSC's steel is key to the development of the manufacturers who rely on steel as major material.

In response to calls from the Taiwan Metalworking Industry Alliance, CSC vice president T.H. Chen said his company currently only exports 25% of its total output, a ratio that meets the government rules. Chen said his company cannot meet the alliance's request to stop exporting steel products unless the government orders all domestic steel producers to do so. Chen further said his company currently exports products mainly to mainland China (including Hong Kong), Japan and Southeast Asia, where many Taiwanese-invested plants are located.