Taiwan based leading steel plate manufacturer Kao Hsing Chang Iron&Steel Corp (KHC) is to discuss the building of a new hot rolled plates plant in Pignan Industrial Zone, South Taiwan, at interim shareholders meeting tomorrow.
To finance the proposed project, KHC is to rise $49.66 million will be raised via private equity placement and has also invited Taiwan's largest steel maker China Steel Corporation (CSC) to participate in the project. Although an evaluation team was created by CSC to conduct a feasibility study about the project, it seems that CSC is very hesitant about the participation in this project. The main reason for this reluctance is an issue of feedstock supplies.
Even though, CSC has invested into Wakayama plant, a joint venture with Japanese Sumatimo to ensure the regular supplies of slabs for its Kaohsiung based HRC producing subsidiary, CSC is still facing slab shortage. As a result, a high rank CSC official stated that the company may consider participating in the project only if KHC ensures slab supplies.
Meanwhile , import of raw material from mainland China is very unadvantageous as import will be charged 25% customs duty which is equal to the profit margin of the proposed plant.
Under such condition, KHC's new mill may suffer a large slab shortage, unless CSC could help it finding a long-term supplier
Due to rising demand for plates, KHC decided to set up a $231.78 million-worth plant to participate in steel plate industry.