China Steel Corp (CSC, 中鋼), the nation’s only integrated steelmaker, yesterday posted a 25 percent month-on-month decline in pretax profit last month because of inventory losses caused by lower steel prices.
However, last month’s numbers were 37.71 percent higher than the same month last year, which the company attributed to a higher gross margin because of lower raw material costs compared with a year ago.
In a filing to the Taiwan Stock Exchange, the company said its pretax profit was NT$1.57 billion (US$52.61 million) last month, compared with NT$2.1 billion the previous month and NT$1.14 billion a year ago.
In the June quarter pretax profit was NT$6.53 billion, up 14.96 percent from NT$5.68 billion the previous quarter and 124 percent higher than NT$2.91 billion a year ago, the filing said.
Last quarter’s figures were higher than the NT$4.07 billion forecast by SinoPac Securities Investment Service Co (永豐投顧).
“Because of declining steel prices, our subsidiaries booked inventory losses, driving down pretax profit last month,” China Steel vice president Lin Chung-yi (林中義) said.
Lin said profits may decline this quarter as steel prices are expected to fall and raw material costs to remain stable.
The company cut its domestic steel prices for shipments this month and next monthby 4.66 percent per tonne on average and is scheduled to announce prices for September shipments on Friday next week.
Lin said China Steel will consider steel prices in neighboring regions when setting its prices, after China’s Wuhan Iron and Steel Co (武漢鋼鐵) raised its prices while Baosteel Group Corp (寶鋼集團) kept its level.
“The problem of oversupply in China remains, but the decline of steel prices in China has somewhat eased recently,” he said.