Rising raw material costs drive steel prices higher

ON THE UP::As demand grows for steel and raw material prices rise, Chung Hung Steel Corp has announced price increases for its domestic as well as its export products

By Camaron Kao  /  Staff reporter

Sat, Jan 26, 2013 - Page 14

Chung Hung Steel Corp (中鴻鋼鐵) said yesterday that it will raise prices for its domestic products next month by US$22.34 per tonne on average and the prices of its export products in March by US$30 per tonne on average, citing increasing raw material costs and growing demand for steel.

Chung Hung’s announcement marked its third consecutive price increase for domestic and export products from the company over the past quarter.

In terms of domestic products, prices for cold-rolled sheets and coils –– used mainly in the automotive industry –– and benchmark hot-rolled sheets and coils will rise by NT$650 (US$22.35) per tonne, with prices for zinc-galvanized sheets, which account for a smaller proportion of the company’s sales, increasing by NT$750 per tonne.

“The total inventory of iron ores [raw materials for steel products] in China dropped from 90 million tonnes last October to 70 million tonnes last month, creating a restocking demand for iron ores,” Chung Hung’s spokesman, Wang Chao-cheng (王朝成), said by telephone.

Demand for steel products in Japan and China has also risen recently, Wang added.

For the whole of last year, Chung Hung recorded revenue of NT$42.16 billion, down 7.62 percent from NT$45.63 billion recorded a year ago.

Last year, Japanese and Korean steel makers sold large quantities of steel products in Southeast Asia, causing steel prices to be dragged down. As for this year, a rise in global steel demand has eased this price decline, Wang said.

The Chinese government is aiming to relieve competition in the steel industry by helping its ten biggest steel makers to take control of 60 percent of steel production within three years.

This will bring steel prices up and benefit Chung Hung, Wang added.

Shares of Chung Hung fell 0.9 percent to NT$9.86 per share, underperforming the TAIEX which dropped by 0.3 percent.

Meanwhile, China Steel Corp (CSC, 中鋼) yesterday said in its filling for the TWSE that its subsidiary company in India will spend NT$2.59 billion on public facilities, a water disposal system, an electricity transmission and distribution system and production equipment for its new factory.

“This is part of our US$178 million investment in a new factory for the production of electromagnetic steel sheets used to make motors and gas compressors for air conditioning units,” CSC spokesman Steve Lee (李慶超) said.

Eyeing the hot weather and rapid economic growth in India, CSC expects that demand for air conditioners will rise significantly in the country.

Currently, CSC exports 50,000 to 60,000 tonnes of electromagnetic steel sheets to India, Lee said.

He added that the new factory also has the potential to export its products to the Middle East and East Asia.

CSC began construction of the factory in October 2011 and it is expected to be operational by June next year.

It will be capable of producing 200,000 tonnes of electromagnetic steel sheets per year.

CSC achieved revenue of NT$207.19 billion for the whole of last year, down 13.8 percent from the NT$240.38 billion reached a year ago.