June 11, 2009
China Steel announces price increases for next month
DEMAND: Spending on public works and infrastructure projects in major markets are lifting global demand for steel. Still, consumption will be down 14 percent this year
China Steel Corp (??), Taiwan’s largest steelmaker, announced yesterday it would raise domestic steel prices by an average of NT$1,268 (US$38.76), or 7 percent per tonne, next month and in August, following in the steps of global peers on improving demand.
This will be the first price increase by China Steel since the end of last year.
The last increase occurred in the fourth quarter last year.
Most steel mills, which cannot afford high losses, have increased output cuts. Moreover, because of growing demand to replenish stockpiles in the international steel market, some steel products have begun to run into supply shortages, leading international steel prices to stage a strong rebound, China Steel said in a statement yesterday.
Spending on public works and other infrastructure projects by countries including China, Taiwan’s biggest overseas market, is lifting steel demand. The global recession had curbed consumption of the metal by builders and carmakers.
The World Steel Association said global consumption of steel products was projected to drop 14 percent this year. Since nearly all steel mills around the world have suffered substantial losses, as long as steel prices drop below production costs, these steel mills will continue to increase output cuts and reduce supply, the statement said.
“We’re less pessimistic now,” executive vice president Chung Le-min (???) said in a telephone interview from Kaohsiung. “It was really bad in March and April.”
Prices of hot-rolled coil, a benchmark product, will rise by an average of NT$1,727 a tonne next month and remain at that level through August, the company said in the statement.
China Steel advanced 3 percent to close at NT$27.90 in Taipei trading before the announcement. The stock has climbed 21 percent this year, compared with a 41 percent gain in the benchmark TAIEX index.
The international steel market could once again face a supply shortage and lead international steel prices to continue rising, China Steel said.
The Kaohsiung-based steelmaker said demand for steel products would recover gradually as the global economy has climbed out of the bottom of the recession.
China Steel declined to say when the company would turn a profit, despite the optimistic industry outlook.
China Steel posted a pretax loss of NT$9.57 billion (US$293.8 million) in the first quarter of this year.
China Steel could continue to cut supplies as the mill is still selling at a loss, Chung said. The mill intends to shut its No. 1 blast furnace for repairs later this year for as many as six months after restarting the No. 3 plant in September, he said.
The mill runs four furnaces with a total annual capacity of 10 million tonnes, including the No. 1 plant’s almost 2 million tonnes.
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By Jerry Lin - STAFF REPORTER, WITH BLOOMBERG - Thursday, Jun 11, 2009, Page 12
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