China Steel Corp (CSC, 中鋼), the nation’s largest and only integrated steelmaker, yesterday said it would lower steel prices by 5.28 percent on average for shipments in the third quarter in response to fluctuations in global markets.
Prior to the cut, the steelmaker had raised prices by 12.6 percent and 6.9 percent for deliveries in the first and second quarter respectively to reflect soaring raw material costs.
Given decreasing global steel prices, the latest adjustment would ensure that its downstream customers can compete with their peers overseas, as some of them are facing fierce competition from cheap steel plate imports in Taiwan, CSC said in a statement.
However, an analyst said ahead of the company's latest price adjustment that the price pullback would negatively impact CSC's earnings and market sentiment on the company.
"We expect the third-quarter steel price pullback will lead to weaker steel demand and lower earnings for CSC during this period," Yuanta Securities Investment Consulting Co (元大投顧) analyst Leo Lee (李侃奇) said in a note on May 8.
Based on the latest adjustment, CSC is to lower prices of its products by NT$1,142 (US$37.91) per tonne for next quarter’s contracts, it said.
Prices for benchmark hot-rolled sheets and coils are to drop by NT$1,459 per tonne for next quarter’s shipments, those for cold-rolled sheets and coils — which are used in the automotive industry — are to fall by NT$1,679 per tonne, and those for hot-dipped, zinc-galvanized sheets are to be cut by NT$1,896 per tonne, the statement said.
Going ahead, the company gave a positive business outlook in light of sustained demand for steel products worldwide, despite price swings in steel markets since March.
Price instability was mainly due to oversupply problems and market manipulation in China, company vice president Lee Shin-min (李新民) said by telephone.
“However, the decline in prices was just a short-term phenomenon,” he told the Taipei Times, adding that steel prices are expected to pick up soon.
Global steel demand is forecast to grow by 1.32 percent annually to 1.54 billion tonnes this year, CSC said, citing World Steel Association statistics.
In the first four months of the year, CSC saw a 200 percent year-on-year surge in pre-tax net profit on a consolidated basis on the back of higher product prices and improving customer demand.
Pre-tax profit skyrocketed to NT$7.13 billion in the period, compared with NT$2.38 billion in the same period last year, company statistics showed.
From January through last month, CSC’s sales soared 26 percent to NT$110.87 billion from NT$87.84 billion, with operating income up 209 percent to NT$8.41 billion from NT$2.72 billion.
Shipments totaled 3.57 million tonnes in the January-to-April period, company data showed.
CSC shares yesterday gained 0.41 percent to close at NT$24.7 in Taipei trading before the price announcement, beating the broader market, which edged down 0.06 percent.
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