China Steel Corp (中鋼) yesterday held steady domestic steel prices for delivery next month, snapping four straight months of upticks as customers digest the effects of price hikes and macroeconomic factors.
The steelmaker said its move matched steps made by Chinese peers Baowu Steel Group Ltd (寶武鋼鐵), the world’s biggest steelmaker, and Angang Steel Co (鞍山鋼鐵), which both paused price hikes for hot-rolled and cold-rolled steel for domestic delivery next month.
“China Steel has been hiking prices following the global steel market’s uptrends since the beginning of this year, but it will take more time for the supply chains to pass the higher costs to downstream clients,” China Steel said in a statement.
Photo courtesy of China Steel Corp
Customers have reduced inventory to healthy levels, but they became conservative about building inventory to cope with the steel industry’s peak season this quarter, as banking turmoil in the US and Europe as well as escalating geopolitical tensions weakened their confidence, the Kaohsiung-based company said.
“Steel prices would enter a transition period in the short term,” it said.
The company said that steel prices would probably start trending upward again after the short pause, given that most Asian steel markets are entering a benign consolidation phase before any breakouts.
Steel prices in the US and Europe are rebounding thanks to improved consumer confidence, it said.
In addition, a pull back in raw material costs is also keeping global steel prices from climbing, the statement said.
Iron ore prices have fallen to between US$120 and US$130 per tonne, while coking coal prices fell to between US$285 and US$300 per tonne, it said.
However, China Steel has a positive view, expecting that demand would bounce back later this year due to improving demand for housing projects and home appliances as the government rolls out tax incentives to upgrade to green products.
To align with the muted market sentiment in Taiwan and the rest of Asia, China Steel said it did not adjust its domestic prices, although manufacturing costs are on the rise.
The company expects its electricity bill to surge by NT$1.2 billion (US$39.39 million) annually after Taiwan Power Co (台電) increased electricity rates by 17 percent for industrial heavy users starting this month.
Higher global crude oil prices and rising water prices also pushed up manufacturing costs, China Steel said.
Prices for its hot-rolled and cold-rolled steel plates, electro-galvanized steel coil used in building construction, as well as galvannealed steel coil used in home appliances and computers would remain at last month’s levels, it said.
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