China Steel Corp (中鋼) is likely to raise domestic steel prices for March shipments today because of strong demand from downstream customers, after the nation’s biggest steelmaker twice reduced prices for December-February delivery.
“China Steel will probably raise all product prices for the first time in three months to reflect rising raw material costs and strong downstream demand,” an analyst at Capital Securities Corp (群益證券) said by telephone yesterday.
The analyst, who wished to remain anonymous, said the company might raise prices by an average NT$800 to NT$1,000 (US$25 to US$31.50) a tonne for March delivery, after reducing them by an average NT$280 per tonne for January-February shipments from December delivery.
The Kaohsiung-based company is scheduled to announce domestic steel prices today after the stock market closes.
Shares of China Steel fell 0.73 percent at NT$34.15 on the Taiwan Stock Exchange yesterday, compared with the benchmark TAIEX’s decline of 1.07 percent.
Last week, China’s largest steelmaker, Baoshan Iron & Steel Co (寶鋼), unexpectedly announced that it would keep prices for its main products for February shipments unchanged from the January level. That came after China’s central bank announced a 0.5 percentage point increase in the reserve requirement ratio for commercial banks in order to contain a potential asset bubble.
Citigroup on Monday predicted that China Steel would raise prices today given recent rises in both spot and scrap steel prices in Taiwan.
The brokerage said that spot prices of hot-rolled coil had recently risen to NT$19,500 per tonne compared with China Steel’s NT$17,900 per tonne, while scrap steel prices had increased by 10 percent over the past two weeks because of maintenance for furnaces and bad weather.
“Traders [have] started accumulating steel products in anticipation of price hikes over the next few months,” Citigroup analysts Peter Kurz and Timothy Chen said in a client note.
Prices of hot-rolled coil, a benchmark product, was expected to increase by up to 5 percent to US$580 a tonne from around US$550, Citigroup forecast. The new March quotes would still be below regional and domestic spot levels, it said.
Given the widening gap between its prices and spot prices, as well as recovering domestic demand, China Steel was likely to continue raising domestic steel prices for April-May shipments when it announces new rates next month, according to both Capital Securities and Citigroup.
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