With the global economic growth momentum weakening and headwinds rising for domestic consumption because of energy price hikes, China Steel Corp (CSC, 中鋼) yesterday said it was keeping domestic steel prices for July-August delivery mostly flat from next month’s levels.
The announcement follows its decision on April 20 to keep steel prices for delivery next month unchanged because demand from downstream customers remained lukewarm. Analysts said they did not expect substantial price hikes in the near term.
China Steel, the nation’s largest and only integrated steelmaker, said in an e-mailed statement that it would not adjust July-August prices for five types of products — steel plates, steel bars and rods, hot-rolled sheets and coils, electro-galvanized sheets and electrical sheets — to help domestic customers maintain their international competitiveness.
PRICE CUTS
However, prices for cold-rolled sheets and coils and for hot-dipped, zinc-galvanized sheets and coils used for automobiles will be reduced by about NT$450 per tonne from next month’s levels, the Greater Kaohsiung-based company said.
“While Taiwan’s economy is expected to improve gradually in the second half, we decided to keep most prices unchanged after taking into account the potential impact of global political and economic uncertainties, as well as domestic fuel and power price increases, on downstream customers,” China Steel said in the statement.
Ahead of the company’s price announcement, Citigroup Global Markets predicted the Taiwanese manufacturer would keep prices for its benchmark hot-rolled coils unchanged at NT$20,300 per tonne to match current domestic spot quotes.
Tsai Yen-ling (蔡燕鈴), an analyst at Grand Cathay Investment Services Corp (大華投顧), said China Steel’s announcement was in line with her expectations.
The brokerage added that the odds of China Steel introducing substantial price hikes in the near term were rather low because market prospects for the second half remained uncleared.
"The company's latest move is mainly to restore and maintain market confidence," Tsai said.
So far this year, China Steel has not been able to raise domestic prices significantly because of global economic conditions.
In February, the company increased prices for delivery last month and this month by an average of 1.11 percent, after it kept prices unchanged for March and lowered January-February prices by an average of 7.08 percent per tonne, company data showed.
PROFIT DOWNGRADE
Tsai adjusted downward her profit forecast for China Steel this year. She expects the company's net income to reach NT$12.19 billion, or earnings per share of NT$0.81, down 37.5 percent from last year’s profit of NT$19.5 billion, or earnings per share of NT$1.45. Revenue is expected to reach NT$226.8 billion, down 5.6 percent from last year, she said in a research note.
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