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China Steel cuts six products' prices

China Steel Corp (中鋼) will lower product prices for domestic customers for a second quarter after prices in China fell on increased output.

The reductions will range from NT$740 to NT$3,750 a tonne for six products in the three months beginning January, the company said in a statement yesterday.

That compares with cuts of between NT$750 to NT$2,500 for seven products in the fourth quarter, the Kaohsiung-based company's first price reductions in about three years.

Steel prices in China, the world's largest producer and user of the alloy, have fallen more than a fifth since the year started as output is rising at the fastest pace in at least nine years, creating a glut.

Baoshan Iron & Steel Co (寶鋼), the mainland's largest steelmaker, announced price cuts on Nov. 22.

Competitiveness

"China Steel will lower domestic prices for most products in the first quarter next year to maintain customers' competitiveness," after Baoshan Iron & Steel reduced prices, the Taiwanese steelmaker said in the statement.

China Steel didn't disclose current prices or the size of the changes in percentage terms. The company sells about 10 percent of its products to China.

Shanghai-based Baoshan Steel said it will cut prices of hot-rolled coil steel to 3,500 yuan (US$433) a tonne in the first quarter and cold-rolled steel prices will be lowered by 800 yuan.

"China's steel production capacity is far more than demand and the gap isn't likely to be balanced in the next two years," said Jonathan Liao, analyst at SinoPac Securities Corp (建華證券).

China Steel said it cut prices for hot-rolled steel by an average NT$2,370 a tonne and those for cold-rolled steel by NT$1,860.

The company also reduced the price of electrical sheets by an average of NT$3,750 a tonne and that of hot-dip zinc-galvanized sheets by NT$930.

It cut prices for steel plates by NT$740 a tonne and those for bar-and-wire rods by NT$1,410.

The price of electro galvanized sheets will be unchanged.

After privatization, the government remains the single largest shareholder in China Steel with a stake of 23.3 percent.
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