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Fri, Oct 01, 1999 - Page 19 News List

Steel firms to benefit from quake

RECONSTRUCTION The sale of steel products is estimated to increase by 20-25% this year for the reconstruction of houses and infrastructure

By Sharon Chuang  /  STAFF REPORTER

Unlike many other business sectors that have suffered heavy losses, the steel industry is expected to benefit from the Sept. 21 earthquake for at least the next two years, according to industry experts. The market research section of China Steel (中鋼), Taiwan's largest steel manufacturer and the world's ninth-largest steel maker by production volume, estimated that the sale of steel products for construction purposes will increase by 20 to 25 percent this year. Sales of products for consumer uses, such as cars, electronic appliances, and computer cases, will also increase by 5 to 10 percent.

According to Wang Chung-yu (王鍾渝),chairman of China Steel, about 15 to 20 percent of the money used for rebuilding houses and the island's damaged infrastructure will go to the steel industry. "The steel industry had started to recover before the earthquake, but the earthquake will greatly help it," said Tsao Chien-Ming (曹建民), manager of the public affairs department of China Steel. "The industry's prospects will be further enhanced, and will reach a climax next year," he added.

The steel industry's fortunes hit rock bottom in the first quarter of this year. With Taiwan and the region's gradual recovery following the financial difficulties over the past few years, the steel industry started to recover from the second quarter of the year. Indeed, the recovery was so strong that in July, China Steel's output of steel products reached the highest monthly output on record for the company. However, the dumping of H-shaped beams and rebars from other countries has kept the prices of these products very low.

The major steel products used for construction include rebars, H-shaped beams, angle bars, and steel structures. According to industry sources, the damage caused by the earthquake will create extra demand for around 2 million metric tons of rebars. Taiwan's regular yearly demand for rebars is around 5 to 6 million metric tons.

With the added demand, rebar prices have risen from about NT$7,200 per metric ton before the earthquake to NT$7,800 now. The price for H-shaped beams has increased from NT$9,300 per metric ton to NT$10,000.

Although steel prices are likely to continue to rise, several manufacturers say that they will not use the increased demand caused by the earthquake to raise steel prices for their own gains. With respect to this, Taiwan's Steel and Iron Industries Association has even set up a hotline for customers to file complaints over hiked steel prices.

Furthermore, to help people made homeless by the earthquake to rebuild their houses, steel manufacturers have agreed to give the priority to providing steel for rebuilding their houses.

According to Robinson Yang, (楊國輝) analyst at Masterlink Securities (元富證券), major H-shaped beam and rebar manufacturers including Feng Hsin Iron & Steel (豐興), Sheng Yu Steel (盛餘), China Steel Structure Co (中鋼構), and Tung Ho Steel (東和) will benefit most from the earthquake.

In response to the increased demand for steel products, the TAIEX steel sub-index has risen from 63.39 before the earthquake to 68.35 yesterday.

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