China Steel eyes stake in Formosa Plastic Group’s Vietnamese steel mill

Tuesday, 10 August 2010 13:31:35 (GMT+2)

On August 9, Taiwanese steelmaker China Steel stated that it is in talks for the purchase of up to a 10 percent stake in Taiwan-based Formosa Plastic Group's planned steel mill in Vietnam.

China Steel indicated that, if the negotiations go smoothly, the purchase will be proposed to its board of directors for approval at the end of the current month. Industry analysts have commented that China Steel, which currently only has a cold rolled coil mill in Vietnam, wants to expand in the Southeast Asian market, but lacks raw materials such as semi-finished steel, with the cost being too high if the feedstock is transported from Taiwan. However, if China Steel buys into Formosa Plastic Group's steel mill in Vietnam to obtain feedstock supplies, costs and risks can be lowered.

Construction is expected to start on Formosa Plastic Group's Vietnamese steel mill in the second half of the current year. Some analysts have commented that it may take five years before the mill starts production.

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