China Steel Corp (CSC, 中鋼), the nation’s only integrated steelmaker, said yesterday that shipments for this year might decline 2.3 percent from last year due to oversupply in China.
The company set a target to ship 9.26 million tonnes of steel products this year, down from 9.48 million tonnes last year, company chairman Tsou Jou-chi (鄒若齊) said at a shareholders’ meeting.
“The capacity of steel in China is currently about 1 billion tonnes a year, and steel production in China this year is likely to rise between 810 million tonnes and 820 million tonnes a year from 779 million tonnes last year,” he said.
As Chinese steel companies continued raising their production, China Steel’s average steel price has declined by NT$4,203 (US$139.91) per tonne since the beginning of 2012, Tsou said.
The company’s pretax profit for the first five months fell 23.34 percent year-on-year to NT$9.36 billion, and Tsou blamed the decline on falling prices amid less-than-expected demand.
"Market sentiment in the first half of last year was relatively bullish as companies expected steel consumption would rise significantly because of new urbanization projects and railroad projects in China. However, steel prices declined significantly since June last year as the steel demand was less than expected," Tsou said.
MILD DECLINE
Tsou said the price decline would be milder next quarter, but it is still too early to tell whether the company’s profit for this year will be higher than last year as the visibility of the industry remains low.
Last year, the firm reported a profit of NT$15.98 billion, or NT$1.05 per share, up 171 percent from NT$5.89 billion, or NT$0.39 per share, the previous year, after it cut operating costs by NT$5.52 billion from a year ago.
“Since the market sentiment is bleak, the only way to increase our profit is through improving efficiency,” Tsou said, adding that the company aims to cut operating costs by another NT$3.7 billion this year.
DIVIDEND
Shareholders yesterday approved a plan by the company to issue a cash dividend of NT$0.7 and a stock dividend of 0.02 percent.
Tsou also told shareholders that the company will continue supporting Kaohsiung Rapid Transit Corp (高雄捷運) despite its losses, and said he believed the subsidiary would swing to the black in 2017 or 2018.
China Steel has a 43.36 percent stake in Kaohsiung Rapid Transit.
Meanwhile, the firm is mulling a project to build and maintain wind turbines for Taiwan Power Co (Taipower, 台電) near Taichung Harbor, Tsou said.
WIND TURBINES
The government plans to appropriate more than NT$10 billion to set up eight wind turbines at sea, Tsou said.
However, to join the project, China Steel is expected to have to purchase 600 vessels to maintain the turbines, with each ship costing between US$80 million and US$100 million, Tsou said.
Assuming it gets involved in the project, the company would prefer to buy the ships from a local shipmaker that can transfer technology knowhow from overseas to construct the vessels, he said.
China Steel shares rose 1.81 percent to NT$25.3 yesterday.
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