Fri, Feb 25, 2011 - Page 12 News List

CSC raises prices by more than 12%

ON THE RISE:The firm may see second-quarter iron ore prices increase by between 15 percent and 20 percent quarter-on-quarter, an analyst at JPMorgan said

By Kevin Chen  /  Staff reporter

Laborers install steel scaffolding at a viaduct construction site on a highway between Neijiang and Suining on the outskirts of Suining, China, yesterday.

Photo: Reuters

Recovering growth momentum in the global economy and a quick rise in the prices of raw materials have prompted China Steel Corp (CSC, 中鋼) to raise domestic steel prices for April and May deliveries by NT$2,811 (US$94.46) per tonne from next month’s levels.

The nation’s biggest steelmaker announced yesterday that it would increase the prices of seven major types of products for its domestic downstream customers by an average of 12.1 percent, with hot-rolled coil, a benchmark product, rising by NT$2,945 per tonne, according to an e-mailed statement from the company.

The latest price rises are the company’s second this year after the Kaohsiung-based firm raised prices on most of its steel products for delivery next month by an average of NT$663 per tonne, or 2.9 percent, earlier this year, including an increase of NT$973 per tonne for hot-rolled coil.

“Production costs have surged by US$150 per tonne recently because of sizable price increases in raw materials triggered by natural disasters in Australia and Brazil,” CSC said in the statement.

The company may see second-quarter raw material prices increase by between 15 percent and 20 percent quarter-on-quarter for iron ore and up to 10 percent for coking coal, JPMorgan analyst Nick Lai (賴以哲) forecast in a note issued on Tuesday.

In recent months, Australia’s coking coal industry has suffered immense transportation disruption because of the country’s most serious floods in the past 50 years, while Brazil’s iron ore shipments have been hit by the threat of tropical cyclones.

To reflect the surge in raw material costs, steel mills around the world have raised prices substantially, with export prices of hot-rolled coils from US steelmakers approaching US$1,000 per tonne, CSC said.

In Asia, China’s Baoshan Iron & Steel Co (寶鋼), Wuhan Iron & Steel Co (武鋼) and Anshan Iron & Steel Group (鞍鋼), as well as Japan’s Tokyo Steel Manufacturing Co, have raised prices for three consecutive months in the current quarter.

Even so, several Japanese steel mills have recently said they would increase prices by a range of between US$150 and US$250 per tonne in the second quarter, lifting export prices of hot-rolled coil to between US$850 and US$900 per tonne, CSC said.

“Export prices of global hot-rolled coils could rise further to US$1,150 per tonne this year,” CSC said in the statement, citing a forecast made by World Steel Dynamics, a US research group based in New Jersey.

Under the latest pricing adjustments, CSC will raise prices for steel plates used in construction by NT$2,949 per tonne for April and May shipments. The company will also increase the price of steel bars and rods by NT$2,500 per tonne, while the price of cold-rolled sheets and coils, which are used in the automotive industry, will be raised by NT$2,747 per tonne.

It will add NT$3,500 to the cost of electro-galvanized sheets, NT$2,000 to electrical sheets and add another NT$3,167 to the price of hot-dipped zinc-galvanized sheets.

CSC shares rose 0.15 percent to close at NT$33.6 on the Taiwan Stock Exchange before the price rises were announced.

The shares have risen 0.3 percent since the beginning of the year, outperforming a decline of 4.8 percent on the benchmark TAIEX.

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