Feng Hsin Steel — China HRC Cycle

Feng Hsin Steel is Taiwan's largest electric arc furnace (EAF) steelmaker — producing long steel products (rebar, wire rod, sections) and flat steel for Taiwan's construction and manufacturing sectors. Listed on TWSE, Feng Hsin's steel prices are set at import parity with Chinese HRC and regional rebar benchmarks, making China's steel market dynamics the dominant pricing signal. Taiwan's robust construction activity — driven by TSMC semiconductor fab construction, military infrastructure and housing — provides a structural demand backdrop.

EAF Steelmaking: Scrap-Based Production

Feng Hsin uses electric arc furnace technology — melting scrap steel with electricity — rather than the blast furnace route (iron ore + coking coal). EAF steelmaking is more energy-intensive but more flexible, with lower capital requirements and faster production adjustment. EAF economics are determined by the scrap steel price (raw material), electricity cost and steel product selling prices — all of which cycle independently.

Taiwan Construction: The Domestic Demand Base

Feng Hsin's primary market is Taiwan's domestic construction sector — supplying rebar for buildings, bridges and infrastructure. Taiwan's construction cycle is driven by government infrastructure investment, private residential construction and semiconductor fab building (TSMC's continuous fab expansion requires enormous quantities of structural steel). TSMC's semiconductor capital investment programme is a structural demand driver for Taiwanese steel.

China Steel Price: The Import Parity Signal

Taiwan imports significant steel from China and Japan, making Chinese HRC prices the ceiling for Taiwanese domestic steel pricing. When Chinese steel prices are high, Taiwanese steelmakers benefit from pricing power; when Chinese producers dump steel at low prices (as occurs during overcapacity periods), Taiwanese steel prices are compressed regardless of domestic demand conditions.

Scrap Export from Japan & US

Taiwan's EAF steelmakers depend on imported scrap — primarily from Japan, the US and within Asia. Scrap prices follow the steel cycle with a lag — rising when steel demand is strong and mills are buying aggressively, falling when mills cut production. Scrap price volatility creates margin compression or expansion relative to steel product prices.

Cycle Performance Summary