China Steel Corp (CSC, 中鋼), the nation’s biggest steelmaker, yesterday trimmed prices for July and August local delivery by a lower-than-expected 1.4 percent for most of its products, following last month’s cut of 7.4 percent for products to be delivered next month.
The latest price cut, NT$251 per tonne on average, is the smallest since August last year, suggesting that reduced global supply augurs a nascent recovery in the industry.
“Decelerating global economic growth curtailed demand for steel in the second quarter. Demand fell short of our expectations,” the Kaohsiung-based company said in a statement yesterday.
LOOMING RECOVERY
A recovery looms because “some steelmakers were forced to launch maintenance programs to cut output and a rebound in iron ore also helped support global steel prices. Most global steelmakers have kept June prices flattish on rising inventory buildup demand,” the company said.
More importantly, steel manufacturers in South Korea and Japan have abandoned using significant price cuts to undercut orders, which will help bring about a recovery, the company said.
China Steel said demand in the US and Europe was stabilizing due to falling inventory and improving economies.
In China, supply still surpassed demand, but prices held steady due to higher iron ore prices, it added.
Based on China Steel’s latest price adjustments, the prices of cold-rolled sheets and coils used mainly in the auto industry is to drop by NT$344 per tonne, while benchmark hot-rolled sheets and coils are to fall by NT$217 per tonne.
Steel plates prices are to decline by NT$611 per tonne, while prices for electrical sheets used to manufacture home appliances are to decline by NT$900 per tonne. The price for electro-galvanized sheets is being reduced by NT$365 per tonne.
STEADY
Prices for electro-galvanized sheets and hot-dipped galvanized sheets will stay unchanged, the company said.
As the company’s contract prices for raw materials are close to market prices, and its operating strategy is to maintain a one-quarter inventory level, Capital Securities Corp (群益證券) said China Steel’s actual steelmaking raw material costs might stop falling next quarter, and product spreads would likely improve next quarter to boost the company’s profitability after bottoming this quarter.
China Steel shares slid 0.39 percent to NT$25.55 yesterday in Taipei trading, underperforming the TAIEX, which inched up 0.25 percent.
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