China Steel Corp unveils pricing plan

Posted on 26 August 2019

Source: Taipei Times

China Steel Corp (CSC, 中鋼) on Friday announced that it would keep steel prices unchanged for most products for domestic deliveries in the fourth quarter and would increase prices moderately on two products to reflect improved market conditions.

The company would increase the price of electrical sheets by NT$255 per tonne and electro-galvanized sheets by NT$173 per tonne, the Kaohsiung-based steelmaker said in a statement.

The company said the decision reflected operating challenges faced by steel mills around the world as well as domestic downstream industries, especially continued high costs for raw materials such as iron ore.

Iron ore prices have skyrocketed since the beginning of this year, with accumulated increases of up to 90 percent at the end of last month.

While prices dropped this month, the year-to-date rise is still more than 50 percent, CSC said.

“Considering the market conditions and operating situations of downstream industries, CSC had been absorbing the increased costs to relieve pressure on downstream customers,” the company said in the statement.

“However, the ability of major steel mills to maintain cost absorption has reached its limit and the fourth quarter is the traditional peak season, so major mills in the US, Japan, China and South Korea have announced price increases,” CSC said. “It is expected that steel prices and transaction volumes in the fourth quarter should improve.”

In the first half of this year, CSC’s net income declined 35.71 percent to NT$7.18 billion (US$228.65 million), or earnings per share of NT$0.46. Cumulative revenue in the period was NT$191.11 billion, down 1 percent from NT$193.71 billion a year earlier.

Without price hikes on its products, iron ore prices would squeeze the company’s gross margin — which dropped to 9.68 percent in the first half from 11.43 percent a year earlier.

The company’s decision to keep prices unchanged for most products also indicated its intention to support public construction projects and seize business opportunities for returning Taiwanese companies amid the US-China trade dispute, CSC said.

“With the government pushing up domestic demand through public construction projects, the order-transfer effect and the return of Taiwanese companies caused by the US-China trade dispute, Taiwan’s fourth-quarter economic and industrial performance should improve further,” the company said. 

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