Industry lauds falling steel price

Steel prices appear to be declining after China announced plans earlier this month to cool its overheating economy, industrialists said yesterday.

Falling steel prices may bode well for the nation's construction and real estate industries for the second half of the year, they said.

"As the price of steel has fallen and will likely stabilize in the second half of the year, local property developers and construction companies will be willing to invest more in the market," Wu Sheng-feng (吳聖峰), chief executive of the Taiwan Steel and Iron Industries Association (台灣區鋼鐵公會), said yesterday.

Before China's announcement, prices of steel had surged by between 33 percent and 40 percent since the second half of last year amid a nationwide shortage, which was weighing on local construction firms and contractors for major government construction projects.

China is expected to adopt more stringent credit controls on sectors that are considered overly invested, such as iron and steel, aluminum, cement, real estate and automobiles.

The price of steel scrap is now about NT$7,000 per tonne, a 28 percent decline from NT$9,700 in March, its highest level this year, Wu said.

The price of billets, the main material in the production of steel bars and wire rods, has fallen from NT$17,500 in March to NT$12,300, he said.

China's move to slow investment has depressed shares of China Steel Corp (中鋼). Shares of the state-run company tumbled from NT$34 in early May to NT$29.1 yesterday on the TAIEX.

Overall, shares in steelmakers dropped by 0.3 percent yesterday, while property builders and construction-materials suppliers rose 0.69 percent.

Steel prices may continue to fall, although at a milder pace, over the next few weeks, said Chang Diau (張調), chairman of Dinyue Housing & Development Co (鼎宇建設) and former chairman of the Association of Construction of Kaohsiung City (高雄市建築公會).

Falling prices will help the real-estate market, but Chang noted that political uncertainty may still affect investment decisions.

"Investors in the real-estate industry are always looking for markets that can return their investment as soon as possible, and the political factor has obviously halted some property-buying among consumers," Chang said.

As a result, Chang said many local construction companies are waiting to see how the political disputes over the president election develop before the decide if they want to invest more in Taiwan.

"I hope the uncertainty passes soon and doesn't depress the property market, which is finally seeing signs of a recovery this year," Chang said.