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Taiwan's Metal Industry Continues to Meet Market Trends

Jan 23, 2014 | By Steve Chuang

Taiwan's Metal Industry Continues to Meet Market Trends
With markets demanding eco-friendly, energy-saving, lightweight metal products, Taiwan's metal industry has been increasingly working on value-added, non-ferrous metals and alloys as aluminum, magnesium and titanium to go upmarket and boost overall competitiveness.

Development in TaiwanAccording to the report authorized by Metal Industries Research & Development Centre (MIRDC), a government-funded R&D body in southern Taiwan, where a large number of domestic steelmakers cluster, the industry's production totaled NT$1.8 trillion to account for 14.8% of the island's overall manufacturing value in 2011 with  a 10-year compound annual growth rate of 10.1%.

MIRDC indicates that Taiwan's manufacturing hinges on the industry, as an industry linkage analysis publicized by the Directorate-General of Budget, Accounting and Statistics shows that sensitivity and influence between the local metal industry and  upstream and downstream sectors both are rated over 1, which means that the industry's development is directly related to not just that of downstream manufacturers, but also to whether product added-value can be enhanced.

Driven by metal manufacturers who develop higher value-added materials to supply downstream makers, MIRDC notes, the metal product industry, for instance, finished 2011 with production value of NT$754 billion, mostly by fastener, golf club head, valves, molds and dies, and bicycle sectors, to increasingly command a 6.2% share of Taiwan's total by manufacturing industries. As a result, Taiwan ranked among the world's top six suppliers of all the abovementioned product categories by export value in the year.

In terms of scale, the metal product industry also has pivotal influence on Taiwan's economic development, MIRDC adds, for it, among other manufacturing sectors, has the largest number of companies and the second highest workforce that totally account for 20.4% and 11.1% of the total, respectively, on the island, with the electronic parts and component industry that is popular with young workers, especially highly educated ones, boasting the biggest payroll.

Growth DriversIn the past decades, the main growth drivers, MIRDC opines, for Taiwanese metal industry's production value, were such lightweight metals as aluminum, magnesium and titanium, with which insiders began working to meet growing market trends towards lighter, more energy-efficient products in the early 2000s. The production value of the industry soared NT$1 trillion for the first time to reach NT$1.1595 trillion in 2004 for a 40.3% yearly growth and has remained between NT$1.1 trillion and NT$1.8 trillion since, compared to figures fluctuating within NT$500 billion before 2004,

Mainly because of advancement of traditional and high-tech manufacturing technologies, MIRDC points out that since 2000 markets have trended toward, more significantly than ever, applications of the said lightweight metals in 3C (computer, communication and consumer) devices, transportation vehicles, building materials, biotechnological and medical instrument, sports and leisure equipment globally.

Meanwhile, MIRDC emphasizes that magnesium and titanium have also been increasingly applied by local manufacturers in notebook PC housings and golf club heads, respectively, with the rise of such metals also nourishing development of downstream processing and related manufacturing sectors. For instance, S-Tech Corp., a leading Taiwanese manufacturer of special alloys established in 2002, was one of many peers that mushroomed during 2000-2004 after finalizing the project on commercial titanium contracted by the Industrial Development Bureau under Ministry of Economic Affairs.

In fact, MIRDC claims that Taiwan's metal manufacturing is a maturely developed, globally competitive industry following over four decades of development. In the steel sector, most operators as China Steel Corp. can match rivals from developed countries in steel re-rolling capacity, product diversity, production technology and quality.

On another front, despite beginning later than most nations and still relying on various imported ingots for production, Taiwan's non-ferrous metal sector, however, has also gained steam mainly from downstream manufacturers to prosper over the past decade, boasting a well integrated supply chain composed of a large number of quality, secondary processing service providers and related subcontractors to be competitive  globally.

Mostly with operators moving upmarket by either sharpening technologies or venturing into high value-added metals, Taiwan's metal industry, MIRDC explains, has fast evolved from an underdeveloped manufacturing sector with annual output of only NT$124.1 billion in 1982 into a driver of sustainable economic growth with production value exceeding NT$1.79 trillion in 2011.

Advancement ContinuesAfter an impressive growth in the past decade, the industry continues advancing with insiders keeping investing in higher value-added metals.

Among them China Steel, the largest steelmaker by both output and revenue in Taiwan, has invested considerably over the past few years in production of high-strength steel and titanium alloy, to help downstream manufacturers of fasteners, hand tools, etc. develop higher-end products.

For sustained business diversification, the firm has also invested NT$7.1 billion in cooperation with its international partner to set up the China Steel Corporation India. Pvt. Ltd. and a plant of electro magnetic sheet metal, scheduled to go online in the third quarter of 2014 with estimated annual output of 200,000 tonnes.

Also, China Steel Precision Materials Corp., established by China Steel and Taiwan's Walsin Lihwa Corp., a leading manufacturer of bare copper wire, wire and cable, and specialty steel in Greater China, in 2011 in Jiangsu Province, southeastern China, is a joint venture dedicated to titanium alloys, nickel alloys and tool & die steels with overall output of 6,000 tonnes a year; while C.S. Aluminium Corp., an aluminum sheet and coil supplier affiliated with China Steel, has been expanding its capacity of hot- and cold-rolled aluminum plates and sheets, to explore overseas markets for materials used in higher-end 3C products.

Gloria Material Technology Corp., a manufacturer of specialty alloys, has newly set up equipment for vacuum induction melting and tool molds and dies; and E United Group, a large-sized steel maker, has just established a joint venture for  nickel-ferrous alloys in Indonesia after spending NT$10 billion to build its first one in Fujian Province, southern China, and plans to build an energy-saving factory of stainless steel in Fujian in the short term. (SC, Nov. 2013)

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