Uncertainties about global economic prospects and weak sentiment among the steel industry have prompted China Steel Corp (CSC, 中鋼) to keep domestic prices mostly flat for next month’s deliveries compared with October-to-November levels.
The nation’s biggest steelmaker yesterday said it would not adjust prices for six of seven major products — steel plates, steel bars and rods, hot-rolled coils, cold-rolled sheets coils, electro-galvanized sheets and hot-dipped, zinc-galvanized sheets — for its domestic downstream customers, according to an e-mailed statement.
Prior to the company’s price adjustment announcement, both Citigroup and Goldman Sachs predicted CSC would keep prices flat for next month’s contracts compared with previous months, citing Baosteel Group Corp’s (寶鋼集團) recent announcement that it would keep prices next month flat in China.
However, CSC will lower prices for electrical sheets to reflect weakening market demand and help maintain international competitiveness for downstream industries during the historically slow season, the statement said.
Under the latest adjustments, CSC will cut prices for electrical sheets by NT$1,122 for next month’s contracts. Overall, prices will fall by an average of NT$42 per tonne, or 0.17 percent, the company said.
“The European debt crisis has caused global economic uncertainty to increase and slowed down growth in the steel industry,” CSC said in the statement. “On top of the slow demand, pressures from inventory adjustments by customers has created an oversupply and caused steel prices to face a downward correction.”
The latest adjustment came after the company announced in August it would raise domestic contract prices by an average of NT$243, or 1 percent, per tonne for deliveries this month and next month.
Meanwhile, CSC yesterday reiterated the company’s plans to acquire stakes in overseas coal and iron mines as it aims to enhance its raw materials self-sufficiency, thereby lowering the impact from high material costs.
“The company is actively evaluating all potential investment opportunities and is planning within four years to increase its self-sufficiency rate to as high as 30 percent,” CSC said in a filing to the Taiwan Stock Exchange.
At present, the company sources about 2 percent of its coking coal and iron ore needs from the mines it owns, the firm said.
The Chinese-language Economic Daily News reported yesterday that CSC is planning to investment about US$2.2 billion to US$2.5 billion to acquire major stakes in overseas mines during the next four years, citing company chairman Tsou Juo-chi (鄒若齊).
However, the company said it has yet to finalize its investment plans for overseas acquisitions.
“The [reported] investment figure is just a rough estimate. The exact number will need an approval from the board of directors,” the company said.