High-level officials from Formosa Plastics Group (台塑集團) and China Steel Corp (中鋼), the nation's largest steelmaker, said yesterday that the two companies are currently in talks about a possible team-up, which may see China Steel providing Formosa Plastics with steel products in its investment projects in Taiwan and China.
While both sides expressed interest in working together, they haven't reached an agreement yet, China Steel Chairman Lin Wen-yuan (林文淵) said after a meeting with Wang Yung-tsai (王永在), vice chairman of Formosa Plastics, in Kaohsiung yesterday.
Wang was reportedly leading a delegation to visit China Steel and discuss the proposed partnership, local Chinese-language media reported yesterday.
Wang's visit fueled local press speculation that Formosa Plastics hopes to secure from China Steel the materials the company needs to expand its sixth naphtha cracker plant in Yunlin, as well as for its steel factory in China's Zhejiang Province.
The construction of the Yunlin naphtha cracker has entered its last phase, with the work costing the company NT$652.8 billion.
The worldwide shortage of steel this year has given Formosa Plastics grounds for concern about steel supplies for its construction, which is said to be a motive for the visit to China Steel.
Meanwhile, Formosa Plastics subsidiary Formosa Heavy Industries Corp (
The plant is scheduled to start production in 2006 with an annual output of 3 million tonnes of steel board.
It is reported that the company is looking forward to securing steel from China Steel, because China is also running short of steel since the government is trying to curb the overheating construction industry.
One China Steel official said that the company's color steel board production capacity is 300,000 tonnes per year; this number will surge to 600,000 tonnes after another production line is completed early next year.
The extra output may go to Formosa Plastics, according to a Chinese-language newspaper report that didn't cite an official's name.
Daphne Lee (
"Our orders are full this year ? we still need to fill these orders to our customers," Lee said.
The shortage of steel has persisted since late last year, and local and overseas building contractors have been demanding all the steel the company can supply, Lee said.
She said that China Steel's annual output is 11 million tonnes, and that the company can't boost capacity much this year.
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