Japanese Reconstruction Works Will Benefit Five Domestic Lines

Taipei, March 16, 2011 (CENS)--Five domestic industries may stand to benefit from reconstruction business opportunities in the wake of the massive Japanese earthquake, including petrochemical, steel, cement, tire, and biotech medical materials.

Major shortage of petrochemicals has occurred on the global market following the shutdown of five Japanese petrochemical plants, with total annual capacities of 1.7 million metric tons, leading to wild price fluctuation. As a result, Formosa Plastics Group (FPG) has suspended quotes for five general-purpose resins.

PX (para-xylene) prices, for instance, have skyrocketed, due to shutdown of 25% of Japan's capacity and expected postponement in shipment resulting from the damage of harbor facilities, prompting PTA firms on both sides of the Taiwan Strait to scramble for supply. Formosa Chemicals and Fiber Corp. will be a major beneficiary of the situation.

Meanwhile, in anticipation of price hikes of scrap steel resulting from suspension of scrap-steel export from Japan, Tung Ho Steel Enterprise has raised, one step ahead of domestic peers, the price of H-shape steel by NT$500 per metric ton to NT$27,300, up from NT$26,800 originally.

Market players expected that cement prices in the Asian market may rise by 5-10% in the second half of the year, along with the initiation of the reconstruction works, bringing considerable benefits to Taiwan Cement and Asian Cement, a considerable portion of whose capacities are for exports.

The Japanese earthquake has further driven down international prices of natural rubber, which already began to drop from mid-February. The price of Malaysian No. 3 natural rubber, for instance, has slipped to the neighborhood of US$4,000 per metric ton, which, plus the appreciation of the NT dollar, has greatly slashed the production cost of local tire makers.

Yang Ke-cheng, chairman of Medtecs International, pointed out that there has occurred huge demand for radioactive protective gears, including radioactive protective houses in Japan and purchase of radioactive devices by other countries, the latter for the purpose of inventory.