A plan by the four major units of Formosa Plastics Group (FPG, 台塑集團) to lower their stakes in a steel mill in Vietnam reflects the group’s caution about global demand, analysts said yesterday.
“As China, one of the world’s largest steel buyers, will no longer pursue high economic growth, global steel demand could slow down accordingly,” Hua Nan Securities (華南永昌證券) analyst Henry Miao (苗台生) said.
In the second quarter, China’s economy grew 7.5 percent year-on-year, slowing from a 7.7 percent increase in the first quarter.
Beijing expects GDP this year to grow by 7.5 percent, compared with a 7.7 percent increase recorded last year. Chinese authorities have said the country wants a more balanced economy rather than simply seeking high GDP growth.
“I think FPG has taken possible lower demand from China into account and decided to cut its stake in the steel investment project in Vietnam,” Miao said.
The group’s four major units — Formosa Plastics Corp (台塑), Nan Ya Plastics Corp (南亞塑膠), Formosa Chemicals & Fibre Corp (台灣化纖) and Formosa Petrochemical Corp (台塑石化) — said on Thursday that they each decided to cut stakes in Formosa Ha Tinh Steel Corp (台塑河靜鋼鐵興業) to 14.75 percent from 21.25 percent.
Before the adjustments, the subsidiaries had poured US$744 million each into the
Vietnam steel project, which is still under construction. It is scheduled to become operational in the second half of 2015 with an annual production capacity of 7 million tonnes.
After the reductions, the four investments in the Vietnam project are expected to be worth US$516 million each.
The group said the four subsidiaries are expected to see their financial burdens eased due to the smaller investments. It added that because steel production is not their core business, they aim to introduce partners in the global steel industry to help them push the Vietnam project forward.
Media reports said FPG plan to introduce foreign partners such as Nippon Steel Corp to the project.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
NEW PRODUCTS: MediaTek plans to roll out new products this quarter, including a flagship mobile phone chip and a GB10 chip that it is codeveloping with Nvidia Corp MediaTek Inc (聯發科) yesterday projected that revenue this quarter would dip by 7 to 13 percent to between NT$130.1 billion and NT$140 billion (US$4.38 billion and US$4.71 billion), compared with NT$150.37 billion last quarter, which it attributed to subdued front-loading demand and unfavorable foreign exchange rates. The Hsinchu-based chip designer said that the forecast factored in the negative effects of an estimated 6 percent appreciation of the New Taiwan dollar against the greenback. “As some demand has been pulled into the first half of the year and resulted in a different quarterly pattern, we expect the third quarter revenue to decline sequentially,”
RESHAPING COMMERCE: Major industrialized economies accepted 15 percent duties on their products, while charges on items from Mexico, Canada and China are even bigger US President Donald Trump has unveiled a slew of new tariffs that boosted the average US rate on goods from across the world, forging ahead with his turbulent effort to reshape international commerce. The baseline rates for many trading partners remain unchanged at 10 percent from the duties Trump imposed in April, easing the worst fears of investors after the president had previously said they could double. Yet his move to raise tariffs on some Canadian goods to 35 percent threatens to inject fresh tensions into an already strained relationship, while nations such as Switzerland and New Zealand also saw increased
RSS