China Steel Corp (中鋼), the nation's largest steelmaker, had a 64 percent decline in first-quarter profit because of cuts in product prices.
Net income fell to NT$5.49 billion (US$172 million) from NT$15.4 billion a year earlier, the Kaohsiung-based company said in a filing to the Taiwan Stock Exchange yesterday. Sales, reported earlier, dropped 20 percent to NT$37.8 billion.
China Steel lowered prices by about 20 percent in the final quarter of last year and the first three months of this year because of expanding production in China, which produces a third of the world's steel and is the biggest consumer of the alloy.
The company sells about 10 percent of its products in China.
"Oversupply in China is still a concern that won't disappear any time soon," Jennifer Liang, an analyst at KGI Securities Co (中信證券), said before the earnings were announced.
She has an "`underperform" rating on the stock.
China's crude steel output, which rose 25 percent to 319.3 million tonnes in last year, may increase by a further 10 percent this year, according to the government-affiliated China Iron and Steel Association. Production last year exceeded demand of 304.8 million tonnes. Steel prices in China dropped 31 percent last year, as production outpaced demand.
China Steel on Nov. 24 last year announced price cuts on six products for domestic customers by between NT$740 and NT$3,750 a tonne for the first quarter, following reductions by Chinese rivals such as Baoshan Iron & Steel Co (
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