WCA March 2007

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From the Americas
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Wire & Cable ASIA – March/April 2007
Arcelor Mittal CFO Aditya Mittal said his company saw
significant potential for improving the profitability of
Sicartsa. The decision to expand into Mexico was prompted
by expectation of annual growth in the Mexican market
of up to 6% over the next 10 years.
Elsewhere in metals . . .
Alcoa, the world’s largest producer of primary
aluminium, on 4 th January announced the formal
opening of its aluminum brazing sheet plant in
Kunshan City, China. Established in April 2006 as
a joint venture of Alcoa and Yencheng Engraving,
Kunshan Aluminium Products Co Ltd produces
heat exchanger materials for automotive and other
industrial HVAC applications and complementary alloy
aluminium products.
It is Alcoa’s third flat-rolled products facility in China.
At full capacity Kunshan Aluminium would produce
50,000 mtpy of aluminum brazing sheet, primarily for the
Asian automotive market.
Kunshan Aluminum has two other brazing sheet
operations: in Lancaster, Pennsylvania, near Alcoa world
headquarters in Pittsburgh; and at Kofem, in Hungary.
Alcoa also produces aluminium rolled products at Alcoa
Bohai Aluminum Industries Co Ltd, a joint venture with
China International Trust & Investment (CITIC), based
in Qinghuangdao, China; and at the Alcoa Aluminum
Products Ltd facility in Shanghai. The American
company said that the Bohai plant is the largest foil
producer and exporter in China.
The Canadian aluminium producer Alcan said it would
invest $1.8 billion over 10 years to expand its smelter
operations in the Saguenay-Lac-St-Jean region of
Quebec, Canada. The expansion is expected to
create 740 high skill jobs over the period, and 1,200 to
1,500 construction jobs.
China pulls back on preferential
treatment for overseas firms
Even as the US hails China’s expression of intent to curb
steel exports (‘Fewer Steel Exports from China,’ above),
another Chinese initiative will be far less welcome to
American companies doing business in China. Beijing has
begun implementing a plan to do away with the low tax
rates available to ‘foreign-invested’ firms that had been a
major factor in attracting overseas direct investment.
As of the New Year, foreign companies active in China
are required to pay land-use tax, formerly imposed solely
on Chinese firms. And the standing committee of the
National People’s Congress is expected to approve a new
corporate income tax structure that will have foreign and
domestic firms paying taxes at the same rate. The Chinese
legislature will likely dictate a single tax rate of 25% by the
end of 2007.
Beijing clearly wants to discourage investment in several
sectors as a means of cooling down its economy. According
to Saibal Dasgupta, writing from Beijing in the Times of
India, the withdrawal of foreigners’ ‘privileges’ will effect
a major transition that brings China closer to the Indian
model: “If the absence of direct elections and parliamentary
democracy made it possible for China to implement
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the differential tax system, economic reasons are now
prompting” the withdrawal of accommodations extended to
overseas interests over 20 years. (‘China Ends Tax Benefits
for Foreign Companies,’ 3rd January).
Aero notes . . .
The Mesa Air Group has said it will become the first
American passenger airline to operate flights out of
mainland China. The Phoenix, Arizona-based company
said in December last year that it plans to sign a joint
operating agreement with Shenzhen Airlines, whose
fleet of 45 planes flies 100 routes within China and
Southeast Asia. According to Mesa’s filing with the
US Securities and Exchange Commission, the as-yet-
unnamed new airline expects to begin service within
12 months, in time for the Beijing Olympic Games in
2008. An initial operation of 20 regional jets will serve
Shenzhen, Beijing, Nanjing, and Zhengzhou.
On 21st November last year Korean Air Lines ordered
25 planes from Boeing Co (Chicago) in its largest-
ever deal as it seeks to benefit from rising demand for
passenger and cargo flights. Bloomberg News reported
that South Korea’s biggest carrier ordered 15 short-and-
long-range passenger aircraft and 10 freighters, which it
expects to begin receiving in 2009. The airline said the
order was valued at as much as $5.5 billion at list prices.
IMF director sees strength in ’07
despite slowdown in the US
The global economy will remain strong this year as Europe
and Asia compensate for a slowdown in the US, according
to International Monetary Fund Managing Director Rodrigo
de Rato. “We are moving into another year of strong
growth,” Mr de Rato told reporters in Basel, Switzerland,
on 8th January. “We certainly see strong growth in Europe,
a continuation of growth in Japan, and we see very strong
growth in many emerging economies.”
While a housing slowdown is cooling growth in the US,
unemployment in Germany in December dropped the most
since 1990 and business confidence in Japan rose to a two-
year high. The IMF head said a US slowdown would not be
severe enough to derail the global economy.
The IMF in September 2006 forecast that the global
economy would expand 4.9% this year, down from 5.1%
in 2006. Mr de Rato in January declined to say whether he
would revise those projections.
He did say that ‘complacency’ should nonetheless be
avoided as ‘ample liquidity’ in the global economy helps
boost asset prices and reduces the price of risk.
Mr de Rato also said the price of oil, which has gained
almost 25% in the last two years, posed an inflationary
threat. The IMF, essentially a Washington-based lender,
describes itself as ‘an organisation of 184 countries
working to foster global monetary cooperation, secure
financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce
poverty.’
Dorothy Fabian – Features Editor
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