China Steel raises prices for third time this year

RECOVERY:: Growing demand has led steelmakers to restart plants they had idled during the recession and analysts expect demand to keep increasing next year

By Yu-huay Sun  /  BLOOMBERG

Fri, Sep 04, 2009 - Page 11

China Steel Corp (中鋼), Taiwan’s largest steelmaker, will raise domestic prices for the third time this year as demand increases.

Prices will rise by an average of 8.61 percent in October and November, the Kaohsiung-based company said yesterday in an e-mailed statement. The company had earlier raised domestic prices for orders in July, last month and this month.

Recovering demand from manufacturers and builders is prompting steelmakers to raise prices and restart mills idled during the global recession. Steel prices in the US rose 10 percent last month. Baoshan Iron & Steel Co, China’s largest steelmaker, said last month it’s running at full capacity.

“Steel demand will keep rising through the whole of next year,” said Ernest Chiang (蔣尚勳), who doesn’t own the stock among the US$61 million he manages for IBT Asset Management Co in Taipei (台灣工銀投信). “Market supply and demand is favorable for China Steel.”

Prices of hot-rolled coil, a benchmark product, for next month and November will rise by an average NT$1,672 (US$51) a tonne, the company said in the statement.

China Steel rose 2 percent to close at NT$30.20 on the Taiwan Stock Exchange before the announcement yesterday. The stock has climbed 36 percent this year, compared with a 55 percent gain in the TAIEX.

Domestic demand for steel will be helped by government spending to repair damage to homes, bridges and roads caused by Typhoon Morakot, Chiang said.

The Cabinet yesterday approved a four-year NT$120 billion special budget to reconstruct areas devastated by the typhoon.

The company will raise plate prices by an average NT$953 a tonne, bar and wire rods by NT$1,800 and cold-rolled steel by NT$1,994. It will raise electro-galvanized sheet prices by NT$2,000 a tonne, electrical sheets by NT$3,600 and hot-dipped zinc-galvanized sheets by NT$2,320. No percentage changes were given for the types of products in the statement.

China Steel restarted its No. 3 furnace a few days earlier than planned on Aug. 27. The plant was shut in April for regular repairs.

Steel output in China, Taiwan’s biggest overseas market, reached a record in July and prices have soared as much as 38 percent since the government announced a 4 trillion yuan (US$586 billion) stimulus package last November to revive the economy.

US Steel Corp, the largest US-based steelmaker by sales, restarted one of two Canadian blast furnaces to meet an increase in demand.