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.
On Tuesday, US President Donald Trump weighed in on a pressing national issue: The rebranding of a restaurant chain. Last week, Cracker Barrel, a Tennessee company whose nationwide locations lean heavily on a cozy, old-timey aesthetic — “rocking chairs on the porch, a warm fire in the hearth, peg games on the table” — announced it was updating its logo. Uncle Herschel, the man who once appeared next to the letters with a barrel, was gone. It sparked ire on the right, with Donald Trump Jr leading a charge against the rebranding: “WTF is wrong with Cracker Barrel?!” Later, Trump Sr weighed
HEADWINDS: Upfront investment is unavoidable in the merger, but cost savings would materialize over time, TS Financial Holding Co president Welch Lin said TS Financial Holding Co (台新新光金控) said it would take about two years before the benefits of its merger with Shin Kong Financial Holding Co (新光金控) become evident, as the group prioritizes the consolidation of its major subsidiaries. “The group’s priority is to complete the consolidation of different subsidiaries,” Welch Lin (林維俊), president of the nation’s fourth-largest financial conglomerate by assets, told reporters during its first earnings briefing since the merger took effect on July 24. The asset management units are scheduled to merge in November, followed by life insurance in January next year and securities operations in April, Lin said. Banking integration,
LOOPHOLES: The move is to end a break that was aiding foreign producers without any similar benefit for US manufacturers, the US Department of Commerce said US President Donald Trump’s administration would make it harder for Samsung Electronics Co and SK Hynix Inc to ship critical equipment to their chipmaking operations in China, dealing a potential blow to the companies’ production in the world’s largest semiconductor market. The US Department of Commerce in a notice published on Friday said that it was revoking waivers for Samsung and SK Hynix to use US technologies in their Chinese operations. The companies had been operating in China under regulations that allow them to import chipmaking equipment without applying for a new license each time. The move would revise what is known
Artificial intelligence (AI) chip designer Cambricon Technologies Corp (寒武紀科技) plunged almost 9 percent after warning investors about a doubling in its share price over just a month, a record gain that helped fuel a US$1 trillion Chinese market rally. Cambricon triggered the selloff with a Thursday filing in which it dispelled talk about nonexistent products in the pipeline, reminded investors it labors under US sanctions, and stressed the difficulties of ascending the technology ladder. The Shanghai-listed company’s stock dived by the most since April in early yesterday trading, while the market stood largely unchanged. The litany of warnings underscores growing scrutiny of
RSS