German chemicals maker Covestro AG yesterday said that the escalating US-China trade dispute would have a limited effect on its Taiwanese business, as its local operation mainly supplies high-tech materials to Southeast Asian markets.
“The trade war has [had] some impact on the market, but we, with production sites over the world, can shift production to where the customers are if needed and avoid the tariffs,” Thomas Roemer, head of thermoplastic polyurethanes (TPUs) at Covestro, told the Taipei Times in an interview in Taipei.
The trade spat started to weigh on demand from Chinese clients several months ago, but the market is volatile and can change quickly, Roemer said, adding that the company has seen demand rise before the US increased tariffs on US$200 billion of Chinese imports on Friday last week.
Covestro’s production and investment policy would not change because of some tweets and it would focus on its products’ long-term development, Roemer said.
Covestro operates TPU plants in Taiwan, China, Japan, India, Germany and the US.
The plants in Taiwan, Japan and Germany supply products to the US, albeit in limited volumes, Roemer said.
The company has a policy of using its production bases to meet regional demand, Covestro said.
Its Taiwanese operations have remained stable thus far, thanks to growing domestic demand and rising TPU shipments to the Asia-Pacific region, Roemer said.
“The Taiwanese site is important for our Asia-Pacific business. As the biggest production site in the region, it satisfies growing demand and also serves as the research center for new products,” Covestro’s global head of TPU production and technology Stephan Ehlers said.
The company yesterday celebrated the completion of a new production line at its TPU plant in Changhua County, which boosted its annual capacity 30 percent from 18,000 tonnes to 23,000 tonnes.
TPU, which has high abrasion resistance and greater flexibility over a wide range of temperatures, can be used in a variety of products, including medical devices, footwear, fabrics, home appliances and automotive components, the company said.
Covestro has seen double-digit percentage growth in demand for TPU over the past three years, and expects an average growth of 6 percent in global demand from 2017 to 2022, which would mark the highest pace among all high-tech materials, it said.
The company plans to recruit more employees in Taiwan to keep up with the growing capacity, Roemer said, but declined to reveal a number.
However, the company said that Taiwan not having many free-trade agreements with neighboring countries would be a weak point.
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