With the domestic steel market still sluggish, Chung Hung Steel Corp (中鴻鋼鐵) yesterday said that it is looking to boost orders from overseas buyers.
“Our strategy is to increase the sales ratio from overseas markets as demand from domestic markets remains low,” a public relations official told the Taipei Times by telephone on condition of anonymity.
The Kaohsiung-based company expects foreign orders to account for 60 percent of total orders this year, compared with 40 percent two years ago, the official added.
Chung Hung’s cumulative revenue in the first four months increased 8.48 percent annually to NT$16.29 billion (US$517.5 million), thanks to increased overseas sales.
Sales contributions from Vietnam, the US, Pakistan and Malaysia are expected to outpace last year’s levels, the official said.
Vietnam could possibly replace the US as the company’s largest market this year, as its economy has been booming due to its growing population and as a result of the US-China trade dispute, he said.
Vietnam sales totaled NT$1.77 billion in the first four months of this year and accounted for 20 percent of the company’s total exports, compared with NT$1.87 billion for US shipments, company data showed.
Chung Hung operates five plants in Kaohsiung and Changhua, with an annual output of 2.4 million tonnes of hot-rolled steel coil, 450,000 tonnes of cold-rolled steel coil and 248,000 tonnes of steel pipes.
Total output of its pickling and galvanizing unit is 900,000 tonnes, the data showed.
The company’s products are used in building materials, vehicles, household electric appliances, oil and gas pipes.
First-quarter net income plunged 89.3 percent to NT$77.94 million from a year earlier, with earnings per share down from NT$0.51 to NT$0.05, due to low steel prices.
Although steel prices recovered by the middle of April, price prospects are unstable amid the lingering US-China dispute, the official said
“Earlier this year we forecast last quarter would be the bottom for us, on the premise that the US-China trade dispute could end in May,” he said. “But as the trade tensions continue, it is hard to say when the bottom for us will be.”
As prices of raw materials, including coal and iron ore, have remained high since the fourth quarter of last year, the company’s gross margin dropped 5.28 percentage points to 4.23 percent last quarter.
The official said the company is cautious about the outlook for gross margin in the following quarters given the weak steel price environment.
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