China Steel Corp (CSC, 中鋼), the nation’s biggest steelmaker, yesterday said it would lower steel product prices by an average of 6.14 percent for deliveries in September, joining its global rivals in cutting prices due to a persistent supply glut and slumping demand.
The latest price reduction, NT$983 (US$31.40) per tonne on average, reflects its shattered hope that reduced global capacity would portend a nascent recovery in the industry.
As the industry is entering its slow season, China Steel said that “prices might hit the bottom in the fourth quarter, supported by inventory restocking demand.”
Furthermore, as most global steelmakers are struggling to generate profits, there is limited leeway for the firm to further cut prices, it said in a statement.
“Demand is sluggish, as the third quarter is a seasonal low period for the steel industry and the global economic recovery is not strong enough to fuel demand,” the Kaohsiung-based company said.
China Steel said the industry slump is widespread.
In addition to sagging demand in the US and Europe, China saw demand freeze due to weakness in the automotive and construction sectors, the statement said.
“Slow demand and towering inventory have led to a decline in global steel prices in August,” the company said.
China Steel also blamed a ripple effect caused by slumping iron ore prices for the downward spiral of steel prices worldwide.
The price reductions by China Steel came as no surprise, as significant price cuts by China’s largest steelmaker, Baosteel Group Corp (寶鋼), earlier this month heralded weak pricing for the local steelmaker.
Baosteel slashed prices across the board by between 80 yuan and 200 yuan (US$12.87 and US$32.21) per tonne, with prices for its hot-rolled steel sheets dropping the most, by about 5 percent month-on-month.
China Steel lowered its price for benchmark hot-rolled sheets by NT$1,140 per tonne, while cold-rolled sheets saw a reduction of NT$729 per tonne. Prices for steel bars and wire rod are to drop by NT$949 per tonne.
Steel plate prices are to decline by NT$561 per tonne, while prices for electrical sheets used in the manufacture of home appliances are to fall by NT$673 per tonne.
The price for electro-galvanized sheets and hot-dip galvanized and galvanneal are to fall by NT$500 and NT$732 per tonne respectively.
China Steel said in a separate statement that consolidated pre-tax income rose 6.67 percent to NT$1.44 billion last month, compared with NT$1.35 billion in May.
The company did not provide financial details.
Revenue fell 0.71 percent to NT$24.02 billion last month from NT$24.19 billion in May, the statement said.
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