China Steel Corp (CSC, 中鋼), the nation’s largest and only integrated steelmaker, yesterday said it would cut its domestic steel prices for September contracts by an average of NT$1,139 (US$14.60) per tonne, or 5.01 percent, after it had left prices for July-August shipments mostly unchanged.
This would be the company’s second-largest price cut this year after it reduced prices by an average of 7.08 percent per tonne for January and February deliveries.
The 5.01 percent cut was higher than market expectations.
On Thursday, Grand Cathay Investment Services Corp (大華投顧) analyst Tsai Yen-ling (蔡燕鈴) predicted a cut of more than 3 percent per tonne to reflect still-weak market sentiment.
“The move reflects the continued slide in international steel prices since the second quarter, because of weakening market demand and persistent oversupply by major global steel mills,” the company said in a statement.
Since CSC provides domestic customers “retroactive rebates” on previous-period purchases if the company announces that it will cut prices for the succeeding period, this means its domestic customers will now receive discounts on this month’s and next month’s purchases, which is likely to have an impact on its bottom line in the July-to-September quarter.
On Wednesday, CSC reported its pretax profit totaled NT$2.91 billion in the April-to-June quarter, following a pretax loss of NT$978 million three months earlier.
Steel prices have softened recently because of slowing economic growth around the world, CSC said, adding that the IMF earlier this week trimmed its global economic growth forecast to 3.5 percent for this year from the earlier estimate of 3.6 percent, while the Academia Sinica on Wednesday lowered its GDP growth forecast for Taiwan to 1.94 percent, from the previous forecast of 3.81 percent.
However, CSC said it expected the international steel market would likely bottom out in the fourth quarter driven by restocking demand, adding that World Steel Dynamics, a US steel-research group, also predicted a rebound in prices in the final quarter of the year.
Under the latest price adjustments, CSC said prices for benchmark hot-rolled sheets and coils would fall by NT$992 per tonne for September shipments.
Prices for cold-rolled sheets and coils, which are used mainly in the automotive industry, are to drop by NT$949 per tonne, while those for electro-galvanized sheets and electrical sheets will be cut by NT$1,000 and NT$929 per tonne respectively.
The company also lowered prices for steel plates used in construction by an average of NT$1,410 per tonne, cut prices for steel bars and rods by an average of NT$1,300 per tonne and reduced those for hot-dipped, zinc-galvanized sheets by NT$1,200 per tonne.