Fri, Nov 26, 2004 - Page 10 News List

China Steel announces price increases

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China Steel Corp (中鋼), the nation's biggest steelmaker, said it is raising prices for domestic customers due to strong demand from electronic appliance makers, automobile companies and shipbuilders.

The increases will range from NT$560 (US$17.40) to NT$1,500 a tonne and take effect on seven products from Jan. 1, the company said in an e-mailed statement yesterday.

The company didn't disclose current prices or the size of the increases in percentage terms.

"The supply in the Taiwan steel market still can't meet demand," the company said. "There's room for further price rises in both domestic and overseas markets."

China Steel has increased prices each quarter since the middle of 2002, benefiting, like rivals such as Nippon Steel Corp of Japan and China's Baoshan Iron & Steel Co, from China's demand for the metal.

Nissan Motor Co, Japan's second-largest carmaker, said today it will halt output at three plants because it doesn't have enough steel, curbing output by 25,000 vehicles.

``The market outlook is positive for China Steel,'' said Jennifer Liang, analyst at KGI Securities Co (中信證券) in Taipei, who predicts the company's earnings per share will rise to NT$6.1 next year from the NT$5.2 her company estimates for this year.

She has a "neutral" rating on the stock.

China Steel said it raised prices for hot-rolled and cold-rolled steel by an average NT$840 a tonne. Hot-rolled steel is used for pipes and containers and cold-rolled steel in making automobiles and home appliances.

The company raised the price of electrical sheets by an average of NT$1,500 a tonne and bar and wire rods by NT$560.

China Steel shares, which have gained 20 percent so far this year, fell 1.1 percent to close at NT$34.6 before the announcement.

Today's product price increases of between NT$560 and NT$1,500 are larger than those of between NT$500 and NT$900 the company announced for the fourth quarter.

China Steel raised prices a day after Baoshan Iron & Steel said it would charge 400 yuan (US$48) a tonne more for cold-rolled steel and 300 yuan a tonne more for hot-rolled steel from the first quarter of next year.

China Steel's product prices are lower than international levels, leaving the company room to raise prices again in the second quarter of next year, KGI's Liang said.

The steelmaker's domestic prices are 10 percent to 20 percent lower than those of imported products, as the company "intends to maintain competitiveness of its customers," Chen Yuan-cheng (陳源成), China Steel's executive vice president said.

Demand for steel products is strong from the automobile, electronic appliance and shipbuilding industries, Chen said.

"Demand from China is still there, while the US and Europe markets are also pretty good." In addition to demand, rising raw material costs are also pushing steel prices higher, Chen said.

Iron ore prices may rise more than 20 percent and those of coal more than 50 percent next year, said Liang of KGI Securities.

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