China Steel Corp (CSC, 中鋼) yesterday said its business in the second half of this year is expected to outpace that in the first half, driven by higher steel prices and improving global demand.
“The demand expected for the next quarter has already exceeded estimates, and I am cautiously optimistic that momentum will extend to the final quarter of this year,” CSC chairman Andrew Sung (宋志育) told shareholders during the company’s annual general meeting at its headquarters in Kaohsiung.
A severe supply glut in the global steel industry last year caused by China’s increased production and a sluggish global economy led several foreign steel mills, such as South Korea’s Pohang Iron and Steel Co (POSCO), to report massive losses.
Photo: CNA
In Taiwan, CSC’s utilization rate dropped to below 70 percent last year for the first time in the past six years, Sung said.
While CSC remained profitable last year, with an annual net income of NT$7.6 billion (US$236.10 million), the figures were down 65.66 percent from a year earlier amid the challenging industry dynamics.
However, since the beginning of this year, CSC has started to see demand for steel grow in tandem with a recovery in global manufacturing, Sung said.
On the back of the continued improving demand, CSC has raised the average selling prices of its products four times this year, Sung said, adding that steel prices in the first half of this year were higher than those in the second half of last year.
CSC’s monthly operating income has also swung back to profit since March, with the accumulated pre-tax income totaling NT$5.08 billion in the first five months of this year, he said, adding that demand has gradually recovered from last year.
When asked by a shareholder how CSC would maintain its competitiveness amid the excessive supply in the global steel industry, Sung said the company has been selecting orders with good margins and profitability.
The company plans to deliver more high-quality products to clients to differentiate itself from its competitors, Sung said.
Following the general meeting, CSC’s board of directors yesterday afternoon re-elected Sung as chairman before he retires in October.
The Ministry of Economic Affairs, which owns a 20 percent stake in CSC on behalf of the government, is the largest shareholder of the company, with three seats on CSC’s eight-member board.
The position of CSC’s chairman is appointed by the Executive Yuan and it is expected that the Cabinet will appoint a new chairman before October.
The board meeting also appointed CSC subsidiary China Ecotek Corp (中宇環保) chairman Wong Chao-tung (翁朝棟) as new CSC president, effective on Tuesday next week.
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