Country Report of Taiwan

Transcription

1 1. REVIEW Country Report of Taiwan June 2018 OF ECONOMY IN 2017 AND OUTLOOK IN 2018 (1) Macro economy in 2017 In 2017 Taiwan GDP grew 2.86% that is higher than expected mainly due to strengthened global economy recovery, thriving semiconductor and machinery industries. Machinery industry benefited from positive global economy prospects and high demand for intelligent automation with more production. Carriers continued passenger/cargo vehicle replacement or expanded aircraft fleet. The e-commerce also stimulated the demand for road haulage. Table Marco-Economic Indicators Indicators (f) GDP growth rate 1.41% 2.86% 2.42% Inflation Rate(CPI Growth Rate) 1.39% 0.62% 1.21% (Foreign Trade) Growth Growth Trade Balance (USD billion) 1.93% 3.45% % 5.20% % 3.27% 69.6 Growth rate of Private 2.32% 2.34% 2.45% Growth rate of Private Investment 2.77% -0.89% 3.62% Growth rate of Government Investment 1.24% 5.22% 8.16% Source: Directorate General of Budget, Accounting and Statistics (DGBAS) (2) Economy outlook in 2018 Directorate-General of Budget, Accounting and Statistics estimated GDP to grow 2.42 % in 2018 due to better domestic demand and continued export momentum. Global GDP is increasing its pace stably in 2018 that IHS forecasted it to edge up to 3.4%. IMF predicted international merchandise trade to grow 4.6% that is better than global GDP growth for two years in a row, mainly underpinned by internet of things (IoT), automotive electronics, high performance computing and artificial intelligence applications. In 2018 Taiwan private consumption is estimated to grow 2.45% as economy turns stable, employment rate improves and minimum wage hike. However the momentum may be constrained by low birth rate and aging population. Private investment is projected to grow 3.62%, mainly led by capital expenditure expansion of semiconductor manufacturer coupled with corresponding supply chain optimization. Meanwhile Taiwan government is keen to tackle investment barriers, deregulate, implement industry innovation project and promote Forward-Looking Infrastructure Plan. Trade tension such as US Section 232/Section 301 probe, EU safeguard investigation, Page 1

2 2. OVERVIEW China tariff imposition on agricultural products of US origin and steel/aluminum anti-dumping and countervailing probe by multiple nations against China and tightened monetary policy in EU and US raise concern for Taiwan s sustainable growth momentum. Table Growth for Major Industry Sectors in Taiwan Gross Domestic Product by Sector Growth Rates in Real GDP (yoy) (e) Agriculture, Forestry, Fishing and Animal Husbandry % 5.95 Industry sector 2.78% 3.81% Manufacturing 3.06% 4.35% Electricity, Gas 4.61% -0.1% Service sector 1.34% 2.26% Wholesale and Retail 0.72% 3.74% Finance and Insurance 2.28% 4.59% Source: Directorate General of Budget, Accounting and Statistics (DGBAS) OF TAIWAN STEEL MARKET IN 2017 (1) Domestic Market Trend In 2017 Taiwan steel production was down by 0.4% with import down by 0.7%, export up by 2.1% and apparent steel consumption down by 3.4%. Steel industry is mature in Taiwan with stable supply and demand hence steel trading plays an important role. (2) Crude Steel and Apparent in Table 3 Crude Steel and Apparent (Unit: million metric tons) (f) Crude Steel Finished Products Finished Products (exclude semi-product)--2 Finished Products (exclude semi-product) Finished Products Source: China Steel Corporation, Taiwan Steel & Iron Industries Association (TSIIA) Page 2

3 3. TREND (3) Apparent of Finished Products Table 4 Apparent of Finished Products (Unit: million MT) Plate Bar/Rod HR CR Coated Steel rebar H beam *Coated Steel include tinplate, EG, GI, PP, and ES Source: China Steel Corporation, TSIIA OF PRIME STEEL CONSUMING SECTORS IN PERCENTAGE Table 5 Trend of Prime Steel Consuming Sectors in Percentage SECTORS Construction 35.7% 32.4% 34.1% Page 3

4 4. STEEL Manufacturing 51.8% 54.7% 54.5% Metal 44.5% 48.0% 48.5% Machinery 0.7% 0.7% 0.6% Transportation 4.2% 3.8% 3.3% Shipbuilding 1.6% 1.1% 0.6% Automotive 1.6% 1.6% 1.5% Others 12.4% 12.9% 11.4% Source: TSIIA Total 100% 100% 100% (1) Construction The aggregate demand for steel structure is on the rise as result of bottoming-out market, increased pace of public construction and infrastructure. (2) Automotive In 2017 car sales reached 444,669 units which hit 12 years history high. Sales growth is due to substantial surge of import car which accounts for 41.8% while domestic car sales is down by 3.8%. (3) Shipbuilding In 2017 global order volume is higher 166% on y-o-y basis while ship delivery is marginally down by 3%. Although global break bulk marketing recovered, shipbuilder was making loss due to the cost higher than order amount. (4) Machinery In 2017 both machinery gross production and export value hit history record high. Gross production is over US$33.4 billion and export value reached US$25.6 billion (21.1% higher y-o-y). China is top export destination with 30.4% market share, followed by US(16.1%) and Japan(6.5%) respectively. Nonetheless the manufacturers of heavy equipment could break even due to keen competition among all international players. MARKET REVIEW IN 2017 AND OUTLOOK IN 2018 All countries were going with robust economy growth and trading in US growth was driven by private investment while export was rosy due to weak US dollar after Q2. EU economy recovered, employment improved and ECB continued to implement QE. Both import and export were positive throughout the year in Japan that steel, automotive and non-ferrous metal drove the growth. Capital expenditure was up 7.2% y-o-y with PMI remained above 50 all the year; meanwhile China closed induction furnace and enforced winter production cut which mitigate global overcapacity. Given lukewarm market of steelmaking raw materials, steel price started to rebound in the second half of 2017 that give rise to restocking by steel consumer. In 2017 Taiwan steel market turned upwards because of robust economy in export destination. The steel price was on upside momentum all the year. However the steel price edged down because of labor working hours reform and appreciation of New Taiwan Dollar in Q Page 4

5 5. SUMMARY 2018 is mixed with upside and downside prospects. US economy fundamentals remain solid and boost steel demand by Tax Cuts and Jobs Act. China strengthens environmental protection, cuts overcapacity and promotes One Belt One Road on a continual basis. EU develops moderate momentum on the back of lower unemployment rate and high confidence. Steel glut continues to ease and worldsteel forecasts global demand to grow 1.8% in However rising global trade tension and tightened monetary policy in US and EU raise concern of uncertainty while high debt in China corporate and local government lingers in the mid and long run. Steel is a nation s backbone industry in which manpower, capital and technology are integral elements. ASEAN infrastructure and urbanization require a vast amount of steel and have huge demand for hi-end steel. Taiwan is in position to bridge the gap with high value-in-use steel, helps ASEAN to establish industry value chain and attract more foreign direct investment. Taiwan steelmakers are dedicated to synergizing ASEAN capacity building by providing comprehensive technology collaboration and value-added services. Taiwan Steel and Iron Industry Association is willing to work closely with ASEAN counterparts, to strengthen the bilateral collaboration and complement one another in vertical integration of steel industry in mutual trust. Page 5