Prices have bottomed: China Steel

China Steel Corp (中鋼), Taiwan's largest steelmaker, said product prices have bottomed after falling about 20 percent in the last two quarters as demand increases.

China Steel cut prices for the fourth and first quarters because of expanding production in China, which produces a third of the world's steel and is the biggest consumer of the metal, used in buildings, cars and appliances. The Taiwanese steelmaker sells about 10 percent of products to China.

"The worst is over," Chiang Yao-chung (江耀宗), China Steel chairman, said at a lunch with reporters in Taipei yesterday.

"We're now reviewing market supply and demand before setting prices for the second quarter late this month," he said.

The remarks came after Wuhan Iron & Steel Co (武漢鋼鐵), China's third-largest steelmaker, on Friday increased March prices for hot-rolled and cold-rolled steel for the first time in at least four months. Wuhan raised prices of hot-rolled steel by 30 yuan to 450 yuan (US$56) a tonne to about 3,170 yuan a tonne. China's steel market is recovering after prices fell 31 percent last year.

Kaohsiung-based China Steel's customers have been receiving increasing orders from abroad since the Lunar New Year holiday ended earlier this month, Chung Lo-min (鍾樂民), China Steel's vice president, said at the lunch meeting.

Taiwan's steel demand will probably grow 2.7 percent this year, after being little changed last year, Chiang said. Total production will be flat from last year, he said.

Shares of China Steel slid 0.5 percent to NT$28 at the Taiwan Stock Exchange yesterday. The stock has dropped 19 percent in the past 12 months, compared with a 7.2 percent gain in the benchmark TAIEX.

China Steel's sales last month fell 26 percent from a year earlier to NT$11.9 billion (US$369 million), the company said on Feb. 7.

Its pretax profit last year was flat at NT$65.1 billion, according to a Jan. 27 filing to the Taiwan Stock Exchange. That compared with a 44 percent surge year-on-year in 2004.

Steel production in China surged 25 percent to a record 349.4 million tonnes last year, creating a glut that increased exports and hurt prices in other regions, the Brussels-based International Iron & Steel Institute said in a report on Jan. 19.