China Steel Corp (CSC, 中鋼), Taiwan’s largest steel producer, yesterday cut domestic prices on some of its products for deliveries next quarter and gave a soft price guidance for next year due to rising uncertainties about global trade.
In an effort to ensure the interests of its downstream customers, CSC has cut the prices of the majority of its steel products, ending five quarters of consecutive price increases that was helped by robust global demand, as well as Beijing’s call to elevate environmental standards and curb oversupply.
The company has cut the prices of electrical sheets by NT$900 (US$29.14) per tonne and cold-rolled coils by NT$400 per tonne, while hot-rolled coils and hot-dipped, zinc-galvanized sheets have been reduced by NT$300 per tonne.
No changes have been made to the prices of steel plates, steel bars and electro-galvanized sheets.
Although the company is facing rising raw material costs, the price cuts would help its customers remain competitive and mitigate inventory losses, as well as ensure smooth deliveries next year before the lull during the Lunar New Year holiday, CSC said in a statement.
While customers hold opposing opinions about steel pricing, CSC said that it would continue to seek consensus across the supply chain, stabilize prices and bring flexibility for the industry to react to changing market conditions, it said.
Meanwhile, the company said that the Organisation for Economic Co-operation and Development this month only reduced its global GDP growth forecast by 0.2 percent to 3.5 percent from its earlier estimate in September and that the absence of a significant tumble is encouraging.
Other demand upsides include continued consumption and economic growth in the US amid interest rate increases, while Washington has also made progress on easing ongoing trade tensions at a G20 summit, the company said.
CSC noted that the World Steel Association last month also raised its forecast for global demand by 3.4 percent to 1.68 billion tonnes from its earlier estimate in April, adding that oversupply concerns have been eased by the tighter output limits imposed by Beijing this winter.
Downsides include upcoming exemptions to the US’ section 232 tariffs on steel and aluminum, which could cause a return to oversupply conditions as Asian suppliers increase output and affect pricing stabilization.
Taiwan’s industries are less susceptible to additional tariffs under the US’ investigation, while local businesses have benefited as customers shift orders to Taiwan-made goods.
Local demand for steel would be further bolstered by the government’s NT$235.8 billion of infrastructure projects, as well as a major expansion by Taiwan Semiconductor Manufacturing Co (台積電), CSC said.
However, the local automobile industry has been struggling with slowing sales, as automakers have been facing intensifying competition from Chinese rivals, it said.
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