Weakening growth momentum in the global economy and a quick appreciation of the NT dollar have prompted China Steel Corp (中鋼) to keep domestic steel prices mostly flat for December deliveries from the October-to-November levels.
The nation’s biggest steelmaker said yesterday it would not adjust prices for four types of products — steel plates, steel bars and rods, electrical sheets and hot-dipped, zinc-galvanized sheets — for its domestic downstream customers, according to an e-mailed statement.
“While the market has entered into a traditional high season in the fourth quarter, the demand remains lukewarm and an oversupply has continued to cap prices at the current levels of correction,” the statement said.
Against this backdrop, China Steel said major mills in the US and Europe had dropped plans to raise prices this quarter, while its peers in China are also suffering from rising inventories amid slow demand recently.
On Monday, Baoshan Iron & Steel Co (寶鋼), China’s largest steelmaker, announced it would keep key steel product prices -unchanged for next month’s shipments from this month, including those for hot-rolled and cold-rolled products, according to a company statement posted on the Chinese-language Web site Bsteel.com.cn (東方鋼鐵在線).
China Steel said a rising NT dollar helped cut the company’s production costs in coking coal and iron ore, but the fast appreciation has impacted on its downstream customers in taking international orders, which could eventually have a negative impact on the company.
However, the Taiwanese mill said it would still raise prices for three types of products, including the benchmark hot-rolled sheets and coils, to reflect tight market supply and keep pace with international price increases for such steel items, according to the statement.
Under the latest adjustments, China Steel will hike prices for benchmark hot-rolled sheets and coils by NT$500 (US$16) to around NT$20,700 (US$653) per tonne for December shipments.
Prices for cold-rolled sheets and coils will rise by NT$500 to around NT$24,400 per tonne, while those for electro-galvanized sheets will increase by NT$1,000 to NT$30,200 for each tonne, the Kaohsiung-based company said.
This will be the company’s first price hike since an average 6.8 percent increase in prices for July and August deliveries announced in May.
Ahead of the company’s price adjustments, Citigroup predicted the Taiwanese mill would keep prices for hot-rolled coils unchanged or increase by between 1 percent and 3 percent to US$650 per tonne to match current domestic spot quotes. The brokerage, however, forecast no change in prices of cold-rolled coils and electro-galvanized sheets because of moderating demand.
Looking ahead, the company said the visibility for the market in the first quarter remains unclear for the time being. The company is scheduled to announce its domestic prices for January-to-February shipments late next month.
Shares of China Steel fell 1.11 percent to NT$31.3 yesterday before the announcement of the new prices, compared with a 1.06 percent decline in the TAIEX. So far this year, the stock has dropped 5.15 percent, while the TAIEX has fallen by 1.2 percent over the same period, according to Taiwan Stock Exchange data.
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