Taipei, July 15 (CNA) Taiwan's export of machine tools is expected to increase to US$4 billion in 2011, which will put it in third place in the world, a senior official said Friday.

"Our hands are overflowing with orders," said Chiu Chiou-hui, a division chief at the Industrial Development Bureau (IDB) under the Ministry of Economic Affairs.

He said some producers are taking in orders for the fourth quarter already. Exports for the first half of the year could hit US$1.9 billion.

Chiu attributed a huge part of the demand to China, which lowered tariffs on machine tools after Taiwan signed a trade deal with the mainland last year.

Market conditions in Japan have also boosted demand. The Japanese yen is appreciating, which makes Japanese products more expensive. Plus, toolmakers unexpectedly benefited from customers who shifted orders to Taiwan after Japan was hit by the earthquake and tsunami.

According to IDB statistics, Japan ranked as the world's largest exporter of machine tools in 2010, with an annual export value of US$7.8 billion. Germany came in second with an export value of US$6.6 billion. Italy followed with US$3.3 billion.

Taiwan holds the 4th spot with US$3 billion in machine tool exports.

However, based on Chiu assessment, Italy will be left in Taiwan's dust by