China Steel Corp (中鋼), the nation’s biggest steelmaker, announced yesterday that it was raising domestic prices on all its steel products for March delivery by an average NT$1,011 (US$31.60), or 4.92 percent.
The expected increase was the company’s first in three months after it cut an average NT$280 per tonne from this month’s and next month’s shipments, and a NT$967 reduction per tonne for delivery last month.
“The price increase was in line with the global trend to reflect rising raw material costs,” Angela Chuang (莊慧君), an analyst at Capital Securities Corp (群益證券), said by telephone yesterday.
China Steel said in a statement that demand had outstripped supply for iron ore from the world’s three largest producers — BHP Billiton, Rio Tinto and Vale — causing the spot price of iron ore to increase by between 70 percent and 80 percent more than the contract price.
Given that the recovery in market demand was strong and the gap between the company’s prices and spot prices sizable, Chuang said China Steel would continue raising domestic prices for April- May shipments.
“The benchmark for hot-rolled sheet and coil [which the company announced would increase by NT$1,000 per tonne for March delivery] will gain another NT$600 to NT$700 per tonne” when the new rates are announced next month, Chuang said.
Shares of China Steel rose 0.15 percent to NT$34.2 yesterday before the announcement of the increased prices. The stock has risen 3.64 percent so far this year, compared with a 0.4 percent increase on the benchmark TAIEX index.
China Steel said it would also raise the price of plates used in construction by an average of NT$918 a tonne, add NT$890 to bar and wire rod prices and NT$1,182 to cold-rolled sheets and coils, which are used in the automotive industry.
The Kaohsiung-based company also increased prices for electro-galvanized sheets by NT$1,000 per tonne, put NT$1,400 onto electrical sheet prices and added NT$1,803 to hot-dipped, zinc-galvanized sheets.
China Steel’s latest price increases came after a series of similar announcements by its rivals.
“Leading US steel mills have twice raised prices by up to US$132 for steel plates in the last two months. Chinese companies, such as Baoshan Iron & Steel Co (寶鋼), Anshan Iron & Steel Group (鞍鋼) and Wuhan Iron & Steel Co (武鋼) have increased domestic and export prices for next month, while Pohang Iron & Steel Co (POSCO) of South Korea has reduced supplies of hot-rolled steel products by a million tonnes because of maintenance work on its production lines,” China Steel said.
Separately, China Steel chairman Chang Chia-chu (張家祝) yesterday appointed Tsou Juo-chi (鄒若齊) to serve as the company’s president, replacing Chen Yuan-cheng (陳源成), who will retire on Feb. 1.
China Steel public relations official Hung Jui-bin (洪瑞彬) confirmed yesterday that Chang announced the new appointment in a four-page internal letter to employees. In the letter, Chang said the Executive Yuan had approved Tsou’s appointment.
“The appointment is still waiting for the approval of the company’s board,” Hung said, adding that the firm had yet to set a date for an extraordinary board meeting to vote on the appointment.
The appointment is likely to stir opposition in the firm, especially from the union, because Tsou retired from the company eight years ago from his position as a vice president and his appointment is contrary to the company’s hiring policy.
Since former minister of economic affairs Chao Yao-tung (趙耀東) served as its chairman in the early 1980s, China Steel has adopted a policy that it would not re-hire employees who retired.
Hung yesterday declined to comment on the matter.
Chuang said the management change would bring “short-term chaos, not long-term instability.”
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