China Steel Corp (CSC, 中鋼) posted NT$7.63 billion (US$274.36 million) in profit before tax for last month, a 24 percent month-on-month increase, thanks to strong demand worldwide as global economies reopen.
In May last year, the steelmaker lost NT$3.60 billion before tax.
The reversal is tied to global demand for steel, CSC executive vice president Hwang Chien-chih (黃建智) said.
Photo: Lin Jing-hua, Taipei Times
“Last May, we were still bearing the full brunt of the COVID-19 crisis worldwide, but now as China and the US are going full steam ahead on stimulus, and economic entities open up all over the world, we are seeing a massive bull market for steel,” Hwang said.
CSC was in the doldrums even before the pandemic, suffering 10 consecutive months of losses before profits turned positive in August last year.
Since then, the company has seen consistent increases in price and demand, and it is becoming more difficult to keep up with orders.
Due to its policy of “gentle price movements” and “consideration for the Taiwanese steel industry,” CSC’s prices are anywhere from “a few tens to a few hundreds” of US dollars per tonne lower than international prices, Hwang said.
“Our downstream customers lost money when we were losing money, and now they are making money with CSC,” he said. “If they have an existing quota with us, we will meet and even try to expand that quota, but we cannot satisfy every Taiwanese buyer.”
After 12 consecutive months of increasing prices for domestic steel delivery, CSC did not raise prices for monthly priced steel products this month even as international prices spiked, although it still substantially boosted them for seasonally priced products.
“We have to strike a balance between not becoming too far detached from international market prices and smoothing price movements for our customers,” Hwang said. “Eventually, prices will have to rise to international standards, but we heard from our customers that with everything else going up at the same time, they need some time.”
Demand for CSC’s products is likely to continue to grow, not just for the next few quarters, but the next few years, he said.
However, the Taiwanese steel industry and CSC itself face a challenge in increasing environmental, social and governance standards internationally for steel products.
“It’s coming. We advise our customers to start working out the carbon footprint of their products as soon as possible, because the EU is going to have tariffs on steel products depending on the amount of carbon dioxide released,” Hwang said.
CSC is trying to upgrade to higher-value-added products to lessen the toll of carbon tariffs, he said.
“In the long term, everybody is trying to figure out less carbon-intensive ways of making steel, but solutions are decades away and the technology, such as hydrogen, is still immature,” he said.
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