Chinese steel firms expanding overseas to skirt US tariff wall
18 Jul 2018
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As steel capacity in China gets saturated and the market gets tighter with the United State, the biggest market for Chinese steel makers, erects a tariff wall, Chinese steel manufacturers are looking to expand elsewhere.
China’s Panhua Group is now reported to planning to invest $3.5 million for setting up manufacturing facility in the Philippines.
The company is looking for a 300-hectare parcel of land, preferably in Mindanao, in the Philippines, reports quoting the Philippine Economic Zone Authority (PEZA) director general Charito Plaza said.
Panhua, which currently produces flat steel products in its three integrated steel mills in China, is looking to put up an integrated steel mill in the Philippines.
The company has been looking for a new manufacturing hub in a neighboring country to skirt the tariff impost by the United States on steel imports from China, since the United States began imposing higher tariffs on steel and aluminum imports from China.
“Because of US, China and G7 trade war, it is an advantage to the Philippines because we have now received intent from various China and European investors that they want to locate in the Philippines to avoid the tariff war going on between US, China and the G7 allies,” the report quoted the official as saying said.
Panhua executives are seeking an audience with President Rodrigo Duterte to present their investment plans, she added.
“The said project is a welcome development for the country, especially in its move towards industrialisation; and that the long awaited basic industry will put a stop on our importation of steel and hasten our country’s industrialization,” she said.
PEZA deputy director general Tereso Panaga said Panhua Group ranks number one in China in steel sheet manufacturing and coating. For its planned project in the Philippines, the Chinese firm reportedly is looking to have 10 product lines for various applications.
The Chinese firm's envisioned project may also involve a modern port within the planned 300-hectare economic zone. PEZA met the executives from Panhua Group during investment mission last month in cities of Chongqing and Zhangjiagang in China. (PNA)
Data from the National Bureau of Statistics showed that China’s daily crude steel output hit a fresh record in June at 80.2 million tonnes down 1.1 per cent from May’s record 81.13 million tonnes, but daily average production in June hit 2.67 million tonnes, higher than May’s record of 2.62 million tonnes.
For the first half, China’s steel output of 451.16 million tonnes rose 6 per cent year-on-year from 419.75 million tonnes in same period last year.
Chinese steel mills are pumping at full throttle to gobble as much of the profits as they could despite environmental checks. Chinese analysts are pegging profit margins at 800-1000 yuan per tonne ($120-150), say reports.
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