China Steel Corp (中鋼), the nation’s sole integrated steelmaker, yesterday raised steel prices for July and August shipments, as a sustained recovery in the construction and manufacturing sectors spurs steel demand.
The prices for new contracts would be 10.3 percent higher than those for shipment next month and represent the fourth increase adopted by the company this year.
The steelmaker said the increases reflect an uptrend in international steel prices, as an improving global economy, especially in the US, Japan and China, breathes new life into the housing and infrastructure markets.
Steel prices in the US surged more than US$100 per tonne last month and those in China also continued a rally for delivery next month, China Steel said in a statement.
“Domestic steel prices have soared in response to positive sentiment in the global steel market. In addition, as customer inventory remains low, restocking demand will continue to boost steel prices in the third quarter,” China Steel said.
The latest price adjustments would bring China Steel’s total price increase to 26.6 percent from the beginning of this year, boding well for the steelmaker’s profitability.
In the first four months of the year, the company posted NT$2.38 billion (US$73 million) in pre-tax profits.
“The company’s price hikes [for July and August deliveries] indicate that demand is sustainable and fully reflect the market situation,” China Steel vice president for sales Liu Jih-gang (劉季剛) said by telephone.
“Our company’s furnaces will be running full steam in the third quarter,” Liu said.
China Steel is expected to ship about 3.4 million tonnes of crude steel in the third quarter, plus some semi-finished products to its Vietnam unit, Liu said.
This quarter, shipments are estimated to reach 3.5 million tonnes, he said.
The price hikes would raise China Steel’s average steel prices for July and August deliveries by NT$1,701 per tonne, or 10.3 percent, China Steel’s statement said.
Among the company’s major products, steel plate would rise by NT$1,100 per tonne and its benchmark hot-rolled sheets will increase by NT$1,871 per tonne, more expensive, it said.
Cold-rolled steel would rise by NT$2,157 per tonne and hot-dipped galvanized steel would increase by NT$1,778 per tonne.
The price of electrical sheets, which are used to manufacture home appliances, is to increase by NT$1,392 per tonne, and hot-dipped zinc-galvanized sheets will be NT$500 higher per tonne, according to the statement.
While the company's price hikes so far are expected to bring in positive earnings momentum, HSBC PLC said profitability might have peaked.
"We believe profitability growth will be difficult to be maintained,as steel prices have already declined by 18 percent [ie. the Chinese export prices of hot rolled coil] from their peak in April," HSBC said in a note ahead of CSC's latest price adjustments.
This story has been updated since it was first published.
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