China Steel Corp (CSC, 中鋼) yesterday gave a cautiously optimistic outlook for its business next year, citing growth from infrastructure demand in Southeast Asia and offshore wind farm development in Taiwan.
Sluggish market demand and fluctuating raw material prices have plagued the steel industry since the first quarter of this year. The state-run company has witnessed a 42.29 percent annual decline in combined pre-tax net income to NT$13.62 billion (US$447.7 million) in the first nine months of the year, while revenue fell 4.94 percent to NT$281.81 billion.
The company on Monday said revenue last month fell 24.04 percent annually to NT$27.68 billion.
While demand is expected to remain flat this quarter, the industry is showing early signs of recovery, as steelmakers are cutting production and raising prices, CSC executive vice president and spokesman Hwang Chien-chih (黃建智) told a news conference in Taipei.
“US steelmakers have taken the lead in propping up steel prices with the Japanese following suit... It has come to a point where we can’t afford further declines,” Hwang said, adding that European industry peers have also been cutting production.
Although a US-China trade spat has cast a pall over the industry, the trend of manufacturers relocating to Southeast Asia and demand for steel for plant construction would benefit the industry, he said.
“The Indian market is expected to demand 108.7 million tonnes of steel next year, second only to China ... and Vietnam, for once, would become one of the top 10 steel consumers globally, demanding up to 25.3 million tonnes next year,” Hwang said, citing a report published by the World Steel Association.
Domestic demand for steel would also increase, as Taiwanese companies are steadily returning home to set up plants, for which CSC expects to ship 200,000 tonnes of steel plates and H-beams, he said.
The nation’s developing wind energy industry would also help drive up demand for steel until 2025, he added.
“According to our estimates, Taiwan’s offshore wind farms would need about 1.5 million tonnes of steel plates, of which we can produce about 750,000 tonnes over the next six years,” Hwang said. “This equals to 125,000 tonnes per year, or about 15 percent of our overall production [of steel plates].”
CSC has invested NT$6.8 billion on a facility to produce underwater infrastructure components through its subsidiary Sing Da Marine Structure Corp (SDMS, 興達海洋基礎), which is to provide Danish wind farm developer Orsted A/S with 56 jacket foundations by 2021.
CSC is also codeveloping an offshore wind farm off the coast of Changhua County, the Site 29 project, with Copenhagen Infrastructure Partners K/S and Diamond Generating Asia Ltd.
The project is expected to be completed and join the power grid by 2024, generating NT$6.34 billion of revenue per year, CSC said.
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