China Steel Corp (CSC, 中鋼), the nation’s biggest steelmaker, yesterday said it would raise domestic steel contract prices by an average of NT$243 (US$8.37), or 1 percent, per tonne for October and November deliveries as global steel prices are likely to bottom out in the fourth quarter.
This would be CSC’s first price hike since May, after the company announced a 5.88 percent cut in prices for third-quarter contracts for domestic customers. However, the 1 percent increase was lower than market expectations.
Daiwa Capital Markets analyst Albert Hsu (徐志偉) said before the price increase that he expected CSC to raise steel prices by between 2 percent and 3 percent on average for October and November contracts in view of emerging signs of a recovery in downstream demand.
“We expect the third quarter to be the worst quarter, in terms of net profit, but we believe sentiment will pick up in the fourth quarter, as we expect steel prices to show signs of a recovery,” Hsu said in a note on Wednesday.
CSC said its second-quarter net profit fell 30 percent to NT$8.67 billion year-on-year, due mainly to rising raw-material costs. The numbers rose by 30 percent quarter-on-quarter thanks to price increases of 12.1 percent for domestic clients in the quarter.
CSC yesterday said the move was in line with recent industry price hikes by steel mills in the US, Europe and China to meet rising restocking demand.
“Earlier this month, US Steel Corp, AK Steel Holding Corp and ArcelorMittal SA raised prices for products such as hot-rolled coils by US$66 per tonne, while some steel mills in Europe are considering raising prices by US$29 to US$43 per tonne on expectations of rising demand after the summer-holiday season,” the Siaogang District (小港), Greater Kaohsiung-based company said in an e-mailed statement.
Adding more upward momentum to steel prices were the recent price increases announced by Chinese producers for next month’s shipments after seeing prices stabilize at home, CSC said.
“As the global steel market is emerging from the impact of sovereign-debt problems in the US and Europe and entering into a hot season, the restocking demand is expected to gain steam continuously,” the statement said.
Under the price adjustments, CSC said prices for benchmark hot-rolled sheets and coils would increase by NT$489 per tonne for October and November shipment.
Prices for cold-rolled sheets and coils, which are used mainly in the automotive industry, will increase by NT$307 per tonne. Prices for hot-dipped, zinc-galvanized sheets will rise by NT$463 per tonne, while those for electro-galvanized sheets and steel bars and rods will remain unchanged.
CSC lowered prices for steel plates used in construction by an average of NT$174 per tonne and by NT$200 per tonne for electrical steel sheets, the statement said.