China Steel Corp (CSC, 中鋼), the nation’s largest integrated steel maker, yesterday said its consolidated revenue last month increased 2.74 percent from a year ago, marking its fourth consecutive month of increase amid demand from downstream clients for restocking.
However, last month’s sales of NT$28.61 billion (US$965.4 million) were down 3.64 percent from the previous month, suggesting that demand seems to have weakened.
Sales of carbon steel also declined 15.3 percent month-on-month to 723,271 tonnes last month, the company said in an e-mailed statement.
“Market conditions in China seem to have deteriorated. This, along with the prospect of softening raw material prices, leaves few incentives for downstream clients to reload actively,” Macquarie Capital Securities Ltd analysts David Liao and Corinne Jian (簡秋萍) said in a note ahead of the release of China Steel’s sales results.
The company reported a pretax profit of NT$1.74 billion last month, down 22.8 percent from October, but up 146 percent year-on-year.
Net profit for the first 11 months of the year totaled NT$22.03 billion, a surge of more than 315 percent from a year earlier, company data showed.
However, the company’s announcement on Nov. 29 that it would lower domestic prices for next month and February’s contracts by an average of 0.75 percent per tonne given global macro uncertainties and a sluggish downstream demand would imply “retroactive rebates” for its downstream customers over this month’s shipments.
While the new prices could squeeze China Steel’s profits and margins this quarter, SinoPac Securities Investment Service (永豐金投顧) forecast China Steel’s earnings per share could still reach NT$1.04 for the whole of this year, up 172 percent from last year’s NT$0.38.