Taiwan Steel Prices Hit 20-Year Highs
Driven by brisk demand from China, steel prices have
hit new 20-year highs in Taiwan. In the past year, steel
prices have risen 109 percent, hitting a new high. Scrap
iron prices have risen from NT4800 per ton in May 2003,
to the current NT9600 per ton.
In South Korea, the demand from China has become so great
the Korean government has imposed steel
export restrictions.
The shortage has become so serious that some of the major
Taiwan steelmakers have stopped quoting prices to buyers.
One of Taiwan's largest steelmakers, China
Steel Corporation, which was founded during the seventies
by the Taiwan government, is now largely dependent on
orders from China to drive production.
China demand has also driven cement prices, with prices
rising to NT2,250 per ton, rising 15 percent in the past
nine months. Taiwan
Cement Corp., a major supplier, has signaled that
prices will rise another NT100, setting a new 10-year
high. Taiwan Cement Corp. is owned by the influential
Koo family, one of Taiwan's oldest and most influential
business families. Koo Chen-fu, the retired chairman,
was for many years the Taiwan "unofficial" representative
in discussions with China about cross-strait relations
and possible political unification.
This China demand has been one of the few bright spots
in Taiwan's economy, which is now suffering from high
secular unemployment caused by jobs going to China. With
all the talk about Taiwan's presidential election and
proposed referendum which has bothered the Bush administration
so much, one point shines through: Taiwan is now economically
dependent on China to keep its economy going.
Chen Shui-bian, who is running for a second term as president
on March 20, stirs up independence and resentment of China
to get his voter base out, but knows that he cannot declare
independence unless he is willing to pull the plug on
the Taiwan economy and relations with the US.
That's why all the talk about a referendum on Taiwan
independence is just that. Talk.
Up until several years ago, Taiwan was dependent on exports
to the US. Now, exports to the US have fallen, but China
has picked up the slack, particularly in the past year.
Now, the Chinese domestic economy and strong demand have
drawn the Asia economies into an orbit around China.
The only question is: "When will political realities
adjust to match economic realities, and how will that
change occur?"
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