Nan Ya Plastics Corp (南亞塑膠), a major unit of Formosa Plastics Group (台塑集團), yesterday gave a conservative outlook for the rest of this year, saying that customer demand for its electric materials might weaken due to an escalating US-China trade spat.
Oil prices and US-China tensions are the two big uncertainties for Nan Ya’s operations, chairman Wu Chia-chau (吳嘉昭) told reporters on the sidelines of an annual shareholders’ meeting in Taipei.
US President Donald Trump on Monday directed the US Trade Representative to identify US$200 billion worth of Chinese goods for additional tariffs of 10 percent, escalating tensions between the world’s two largest economies.
The latest development came after the US last week announced a 25 percent tariff on up to US$50 billion worth of Chinese goods, prompting Beijing to respond with a 25 percent tariff on US$34 billion of US products.
The trade spat would likely effect Nan Ya’s electric material products more than its other products, as the US’ latest tariffs are mostly related to high-tech industries, Wu said.
The US’ protectionist measures are targeting the “Made In China 2025” plan, considering the theft of intellectual property, he added.
Nevertheless, Nan Ya said it is upbeat about the sales of its petrochemical and plastics products, as global customer demand remains robust.
Global demand for ethylene glycol, one of Nan Ya’s benchmark products, is estimated to reach 28.44 million tonnes this year, up from last year’s 27.65 million tonnes, according to projections in the company’s annual report.
The company said it would continue investing in Taiwan, the US and China this year to lift production capacity of ethylene glycol and copper foil to meet rising demand worldwide.
The company has set a sales target of 2.35 million tonnes of ethylene glycol and 74,680 tonnes of copper foil this year, it said.
At the meeting, shareholders approved a proposal to distribute a cash dividend of NT$5.1 per share, based on net profit of NT$54.52 billion (US$1.8 billion) last year, or earnings per share of NT$6.87.
Profit last year rose 11.6 percent from NT$48.84 billion a year earlier, while sales over the same period rose 11.2 percent to NT$306.14 billion from NT$275.29 billion, supported by higher product prices.
The company partly attributed the performance to profits generated by its listed DRAM manufacturing unit, Nanya Technology Corp (南亞科技).
Nan Ya shares yesterday fell 2.13 percent to close at NT$82.8 before the shareholders’ meeting, underperforming the broader market, which lost 1.65 percent.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS