China Steel Corp (中鋼), Taiwan’s biggest steelmaker, yesterday reported a fifth straight month of pre-tax losses as its offshore wind power subsidiary’s financial performance worsened and steel demand slumped.
Pre-tax losses ballooned to NT$1.29 billion (US$42.23 million) last month, compared with pre-tax losses of NT$840 million in July, the Kaohsiung-based company said in a statement.
In August last year, the company posted a pre-tax income of NT$240 million.
Photo courtesy of China Steel Corp
China Steel attributed the wider losses last month to a reduction in power generation by Zhong Neng Offshore Wind Farm (中能離岸風電), and lower non-operating income, mainly from a mining affiliate, whose operating costs rose, it said.
During the first eight months of the year, pre-tax losses amounted to NT$3.7 billion, compared with a pre-tax profit of NT$4.32 billion during the same period last year.
“Cumulative losses before income tax worsened from the same period last year mainly due to declines in steel sales and lower average selling prices, leading to revenue falls and higher operating losses,” the company said.
China Steel shipped 4.94 million tonnes of steel during the January-August period, down 5.18 percent from 5.21 million tonnes shipped a year earlier. Revenue shrank 12 percent year-on-year to NT$217.4 billion during the same period.
However, the company is quite positive about the outlook for next quarter, on the back of a seasonal pickup in steel demand and an improving macroeconomic environment.
Besides, destocking on the customer side is nearing an end, it said.
Demand for global commodity products is picking up, as businesses became less conservative about spending amid a respite in US tariff policy uncertainty and potentially key interest cuts by the US Federal Reserve by the end of this year, China Steel said.
On the supply side, global steel supply is stabilizing, as Beijing recently launched strict curbs on new steel output, it said, adding that it would help the global steel industry get back on track.
China is the world’s biggest steel producer.
Given the positive developments, China Steel raised price quotes for a second time for its major products for domestic deliveries this month and in the fourth quarter.
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