China Steel in Tie-Up talks With China Firms

China Steel, Taiwan's top steel maker, is talking with three of its leading peers to jointly invest in overseas miners to take advantage of low prices and secure future supplies, its chairman said on Wednesday.
China Steel is seeking possible deals with Wuhan Steel, Angang Steel and Baoshan Iron & Steel, as well as Japan's Sumitomo Metal, said chairman CJ Chang.
"We are in talks with them about buying stakes in global mining companies," he told Reuters in an interview, declining to identify specific miners. "All of China Steel's raw materials are imported. We hope joint bids with these China peers will help secure our future supply."
Major suppliers of China Steel include BHP Billiton and Rio Tinto, the latter of which is planning a $19.5bn tie-up with another Chinese firm, state-owned metals firm Chinalco.
China Steel shares rallied on news of the potential tie-ups, ending up 2.5% in Wednesday trade even as the broader TAIEX share index fell 0.3%. The shares have staged a 27% rally in the past month, outpacing the TAIEX's 24% rise.
More losses
Chang added that China Steel expects to report more losses in the first and second quarters of this year, amid weak demand and high raw material prices. The company reported a net loss of T$15.45bn ($458m) in the December quarter, as it and its global peers suffered during the global economic downturn.
"The steel industry should bottom out in the first half. Steel prices have dropped to a level close to production costs," Chang said. "A recovery would come at the end of this year before stabilising in the second half."
Separately, Chang said China Steel would welcome various ways of tying up with Formosa Plastics Group, including jointly building a steel plant in Vietnam.
His comments came after market speculation that Formosa, among Taiwan's major conglomerates, was aggressively buying China Steel stocks recently, while foreign investors were heavy net sellers of the shares.