Oversupply of Global Steel and Threat from Chinese Steel Being Challenges of Taiwan

Macquaries Securities pointed on Feb. 20 that after considering the oversupply of global steel and threat from Chinese steel, it down adjusted the credit rating of related steel sector in Taiwan as “to cut down the investment.” It is expected that the profit will be reduced.

According to the latest forecast of the industry research team of Macquaries for global raw materials, the oversupply of global steel will continue and it may take several years for this problem to be solved.

In addition to the imbalanced demand and supply, the Chinese steel may be also allowed to be imported into Taiwan, which is a big challenge to Taiwanese fastener companies this year. Currently, over 50% imported steel, which must be inspected one by one, are from China. Taiwanese government is negotiating with China for the imports of upstream steel and the final result must be agreed by the public, which has, however, posing threat to the entire industry.

Taiwan is a mature market. If too much cheap steel from China is imported, Taiwanese domestic market will not be able to digest it all. The biggest impact will be on upstream steel companies, but it will be favorable to those in downstream.