CSC Steps Up Investments in India Amid Tougher Global Markets

In light of challenging global market for steels, Taiwan-based China Steel Corp. (CSC), the island's largest steelmaker by size, is stepping up investment in India to explore business opportunities in the world's second most populous country and secure sustainable development.

Obstacles stand in the way of  Taiwan's steel industry, such as  stalled negotiations between Taiwan and China over a cross-strait goods trade agreement, which increases the possibility of marginalizing Taiwanese steel firms amid growing rivalry from Korean competitors once the Sino-Korea free trade agreement comes into effect in 2015.

To cope with increasingly harsh global competition, CSC plans to increase investment in India to lead Taiwan's steel industry to build footholds there, to pave the road into not just emerging markets but also the Middle East, Africa and Europe.

CSC confirmed to mull further output expansion at its newly constructed plant of electromagnetic steel sheets, which is undergoing trial production and scheduled to begin mass production next year with annual output of 200,000 tonnes, to add one million tonnes to the plant's overall output and bring CSC's total investment there to US$1 billion.

But CSC concedes the output expansion depends on outcome of  negotiating tariff reductions between Taiwan and India. Presently materials shipped from Taiwan to India carries duty cut to 5% from 7.5% without any free trade agreement, which is still much higher than 1.8% placed on  Korean suppliers under the Korea-India free trade agreement.

Since electromagnetic steel sheets are high value-added products primarily for production of cars, motors and household appliances, industry insiders note that CSC's said plant will focus on filling domestic market demand, and export partly to the Middle East and Europe. More downstream manufacturers from Taiwan will be motivated to invest there once the plant becomes profitable.

CSC's subsidiary, China Steel Global Trading Corp., has also joined hands with Mahindra, an Indian carmaker, and Japan-based Mitsui & Co., Ltd., to set up an automotive steel processing and distribution plant in Maharashtra State, western India, amid its business deployment in South Asia to help boost CSC's presence in the country.

For the first 10 months of this year, the firm's cumulative pretax profits totaled NT$23.207 billion (US$773.56 million), surging  14.37% year-on-year, with carbon steel sales of around 8.12 million tonnes. (SC)

CSC's Pretax Profits by Quarter
	Q3, 2013	Q4, 2013	Q1, 2014	Q2, 2014	Q3,2014
Pretax Profits	NT$5.828 Bn.	NT$5.170 Bn.	NT$5.073 Bn.	NT$6.620 Bn.	NT$8.571 Bn.
YoY Growth Rate	182.93%	141.41%	- 10.66%	1.36%	47.07%

Source: Market Observation Post System