China Steel denies talking with Formosa

China Steel Corp (中鋼), Taiwan's biggest steelmaker, said it isn't in talks with Formosa Plastics Corp (台塑), Taiwan's biggest petrochemicals firm, about investing in a new steel mill to be built in southern Taiwan.

The reported yesterday that Formosa Plastics will invest at least NT$100 billion (US$2.9 billion) in the mill. Formosa Plastics has been considering an entry into the steel business for 10 years, though it's been restrained by concerns it couldn't compete with China Steel's lower production costs, the paper said.

"We are not in talks with Formosa Plastics to invest in a steel mill," said Wang Mao-ping (王茂賓), general manager of the public affairs department of China Steel.

China Steel shares fell NT$1.42, or 8.9 percent, to NT$14.60, on the announcement, marking an all-time low for this year.

China Steel Chairman Kuo Yen-tu (郭炎土) and Formosa Plastics Chairman Wang Yung-ching (王永慶) had talked about investing in a steel mill while Kuo was vice chairman of Yieh Loong Co (燁隆), a rival steelmaker, China Steel's spokesman Wang said.

Kuo was appointed chairman of state-run China Steel in June by Taiwan's Ministry of Economic Affairs, replacing Wang Chung-yu (王鍾渝), a move opposition lawmakers described as retribution for his support of the opposition party during the last presidential election.

The economic affairs ministry owns 40.5 percent of China Steel and traditionally chooses the company's chairman.

"It's no secret that Chairman Kuo wants to build a second steel mill at the [proposed] Pinnan [Industrial Complex], but it's premature to say which company we want to invest in this project," said China Steel's spokesman Wang.

Kuo has been pushing to build a steel mill in Pinnan Industrial Complex (濱南工業區) in southern Taiwan, although the plan has been opposed by environmentalists there.

China Steel is still evaluating plans for the mill, Wang said.

China Steel said last week it will ask Japan's five largest steelmakers to invest US$200 billion in the mill, which will double China Steel's production capacity. Kuo and other China Steel executives plan to visit Japan after July 20.

Meanwhile in related news, Tung Ho Steel Enterprise and Kuei-Yi Enterprise, the two Taiwan steelmakers named in a US anti-dumping case, announced yesterday that they have confidence in being cleared from the list of suspected violators.

US steelmakers charge that Tung Ho dumped its steel products at 40.28 percent below fair market value and that Kuei-Yi sold its products at 69.61 percent below fair market value.

However, Tung Ho and Kuei-Yi both claim that their products were sold at fair market value prices, with Tung Ho exporting only 20,000 tonnes at NT$10,500 (US$350) per ton and Kuei-Yi exporting approximately 30,000 tonnes at US$300 per ton.

The US International Trade Commission (ITC) determined Monday that there is "a reasonable indication" that the US steel industry has been "materially injured or threatened with material injury" by imports from Taiwan, China, Germany, Italy, Luxembourg, Russia, South Africa and Spain.

The ITC's determination moves the case forward to the US Department of Commerce, which is charged with continuing investigations into the alleged dumping of structural steel products.