Steel Scrap

An Expert's View about Iron and Steel in Taiwan

Posted on: 27 Apr 2012

In 2011, Taiwan’s annual demand for steel scrap reached 11.7 million metric tons, representing a 5% increase from 2010. This increase in demand was largely driven by the global economic recovery from the financial crisis. Since the industry’s low point (October 2008 - January 2009), Taiwan’s economy has been on track to a relatively healthy recovery. Crude steel production has increased and aggregate demand in 2011 for scrap metal has already bounced back to pre-crisis levels.
The United States remains Taiwan’s largest global supplier of steel scrap. In 2011, Taiwan imported 3.68 million metric tons, a 27% increase from 2010. The U.S. currently accounts for 61% of total import to Taiwan of metal scrap.
Taiwan authorities continue to announce funding for public works projects across the island and businesses are continuing to make plans to construct new factories to increase their overall production capacity. These developments suggest Taiwan’s future demand for steel scrap will be on the rise which will increase opportunities for American suppliers of steel scrap.

Market Demand
In general, Taiwan is still dependent on importation of steel scrap to meet current and future demand. As such, industry experts predict an upward trend in demand to continue into 2012 and throughout the next 5 years with an average annual growth rate estimated at 4.97%.

From January to November of 2011, Taiwan crude steel production reached 18.5 million metric tons, accounting for 1.5% of the total production globally. The expected increase in Taiwan’s crude steel production will also keep the increase in demand for steel scrap imports steady for the next few years. According to the Metal and Iron Research Center, the heavy industrial machinery and steel industry will grow as designated infrastructure and urban development projects get underway i.e. the National Freeway No. 2 Widening Project and the construction of Taoyuan International Airport Terminal Three. Over the past two years, for example, two of the local electric steel mills, Lo-Toun Steel and Tung Ho, expanded their annual production capacity to a combined output of 1.1 million metric tons per year. It should also be noted, the demand for scrap metal generally decreases seasonally during the third quarter as electric steel mills on the island commonly face widespread energy shortages during Taiwan’s hotter summer months.

Taiwan currently has 25 electric furnace steel mills in operation, up from 20 mills since 2006. These mills have a combined 2011 capacity of 14.2 million tons, up 8.3% from 2010. As one industry contact reported, it requires approximately 1.1 metric tons of steel scrap to produce 1 metric ton of crude steel. Thus, the high ratio of steel scrap to produce crude steel underlines Taiwan’s continued stable demand for steel scrap, even during low points in overall production. More recently, crude steel manufacturers throughout Taiwan have continued investing in new mill capacity to meet expected rising domestic demand. In June 2010, Tung Ho Steel expanded their facility’s annual capacity by 500,000 metric tons, while in July 2010, Lo-Toun completed construction of its latest electric furnace steel mill in eastern Taiwan with an annual capacity of 600,000 metric tons.

In 2011, Taiwan’s total market for steel scrap reached 12.47 million metric tons (slightly down from 12.51 million metric tons in 2010), with imports accounting for 40% of the total market. As of November last year, leading exporters of steel scrap to Taiwan include: United States (61%), Hong Kong (6.2%), and Australia (2.7%). Steel scrap exports from the U.S. and neighboring Asia-Pacific nations have tended to dominate mainly due to lower shipping costs compared with their European counterparts. In 2007, Taiwan steel scrap imports from the U.S. more than doubled, reaching 2.06 million metric tons. In 2008 and 2009, U.S. imports of steel scrap to Taiwan managed to remain above this 2 million metric ton mark even during the recent global economic recession when overall imports and consumption of steel scrap decreased by 29% and 23%, respectively. In 2011, for the first time Taiwan imported over 3 million tons of scrap metal from the U.S. According to industry experts, even though Japan provides relatively good quality of steel scrap with lower shipping costs, most Taiwanese buyers still prefer purchasing scrap metal from U.S. suppliers due to their competitive pricing and quality mix.

Read the full market research report

Posted: 27 April 2012