China Steel Corp (CSC, 中鋼) yesterday announced a deeper 2.27 percent price cut for its products to be shipped to local customers in March amid constant oversupply and weak demand, but the nation’s biggest steelmaker expects prices to rebound next quarter due to recovering demand from the US and China.
On average, China Steel will trim steel prices by NT$425 (US$13.43) per tonne for its March deliveries, which is slower than the rate of decline of between US$20 and US$30 per tonne globally in the period from November last year to the present, the Greater Kaohsiung-based company said.
In November last year, China Steel trimmed prices for its January-February contracts by 1.71 percent per tonne on average.
“We cut domestic steel prices to align the local market with the global steel market. Oversupply and falling raw material prices have added to weak customer sentiment,” China Steel vice president for sales Liu Jih-gang (劉季剛) said by telephone.
The wobbling global economy and worsening fiscal deficit curtailed fixed asset investment, such as houses and manufacturing equipment, leading to slackening steel demand and a price decline, Liu said.
After gloomy demand over the past six months, China Steel has seen some positive signs recently.
On the demand side, “the US market is gathering steam because of faster-than-expected recovery in the automotive and construction sectors. China is also likely to grow slightly,” Liu said. “Those factors will support our expectations of a price rebound in the second quarter.”
On the supply side, China decided to end subsidies for Chinese steelmakers this year in an effort to retire ineffective or out-of-date factories, which will curb price competition from Chinese steelmakers, Liu said.
Moreover, ArcelorMittal SA, the world’s biggest steelmaker, is expected to hike prices to cope with rising costs due to the weak euro, after the European Central Bank launched a 300 billion euro (US$347.24 billion) stimulus package, China Steel said in a statement.
Under the company’s latest adjustments, the price of cold-rolled sheets and coils, which are used mainly in the automobile industry, is to fall by NT$842 per tonne, while that of benchmark hot-rolled sheets and coils is to drop by NT$622 per tonne, China Steel said in a statement.
The price of electrical sheets, which are used to manufacture home appliances, is to decline by NT$504 per tonne, and hot-dipped zinc-galvanized sheets will be NT$600 lower per tonne, while the price of electro-galvanized sheets will remain unchanged, it said.
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