China Steel Corp (中鋼), the nation’s largest steelmaker, yesterday said it would be keeping steel prices for delivery next month steady as customers have accumulated inventory after global supply chain blockage suspended production.
The Kaohsiung-based company urged Taiwanese steel-using companies to take advantage of the lower steel prices to prepare for Environmental Social Governance (ESG) challenges it sees coming down the line for related industries.
“We hope that our downstream buyers can take full advantage of this period of price stability in steel to accelerate their ESG transition efforts and be prepared for the worldwide trend in decarbonization,” China Steel said in a statement.
The company also said it plans to reduce carbon emissions from 2018 levels by 7 percent by 2025, and to be completely carbon neutral by 2050.
“We will be following the lead of Tata Steel Europe and Germany’s Thyssenkrupp Steel in adding a carbon surcharge,” the company said.
China Steel said that several factors are indicating a rebound in Asian steel prices in the fourth quarter, including a rise in demand due to a global economic recovery as well as a surge in raw material costs.
“The strict ‘dual-control’ electricity use policy mandated that many steelmakers in China can only run during off-peak hours from November 15 to March 15, 2022,” the company said.
“We predict that crude steel production will decrease by at least 30 percent,” it added.
In addition to predicting tighter supplies due to electricity shortages, the company said that the price of coking coal has broken US$400 per tonne, while iron ore, which hit bottom last month, has risen by nearly 40 percent.
“Given the tightness in supply of various steel smelting materials and the Baltic Dry Index has reached a 13-year high, we expect Asian steel prices to rebound,” China Steel said.
The Baltic Dry Index is a bellwether index for global dry bulk shipping, which has surged alongside demand for coal imports amid a global energy crunch.
Global and domestic demand for steel is expected to be strong, said the state-run company, which has a committee decide the price of steel for domestic delivery, monthly for some products and quarterly for others.
The World Steel Association predicted that “the demand for global steel will grow by 4.5 percent year-on-year to 1.86 billion tonnes, and that a further 2.2 percent growth year-on-year is expected in 2022,” China Steel said, adding that it expects a bullish steel market until next year.
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