China Steel Corp (CSC, 中鋼), the nation’s only integrated steelmaker, on Saturday reported a loss for a third consecutive month as revenue hit its lowest monthly level in more than three years.
The company last month incurred pre-tax losses of NT$1.26 billion (US$41.93 million) on a consolidated basis, compared with pretax losses of NT$1.02 billion the previous month and pretax income of NT$2.16 billion a year ago, it said in a statement.
Operating losses were NT$1.09 billion, down from NT$1.18 billion a month earlier and compared with operating income of NT$2.36 billion a year earlier, the statement said.
Consolidated revenue dropped 17.18 percent from NT$29.1 billion in December last year to NT$24.1 billion. On an annual basis, revenue shrank 33.19 percent from NT$36.08 billion.
The company attributed the decline in revenue to fewer working days due to the Lunar New Year holiday, as well as to lower product prices.
Meanwhile, shipments were 811,988 tonnes, down from 882,824 tonnes in December last year, it said.
Last month’s losses indicated that CSC’s earnings momentum would remain weak this quarter, following pretax losses of NT$815 million in the fourth quarter of last year amid declining product prices and rising iron ore costs.
In addition, the Chinese market has been affected by the COVID-19 outbreak, which might hurt demand and result in inventory pileup, Yuanta Securities Investment Consulting Co (元大投顧) said in an investment note.
However, it forecast that CSC would return to positive territory in the second quarter, as the company would likely raise its steel quotation prices for domestic deliveries and raw material costs should decline from this quarter.
“Although the coronavirus will likely disrupt short-term demand, supply in China is also being restricted, which could result in transfer orders for Taiwanese companies,” Yuanta analyst Leo Lee (李侃奇) said in the note.
“Furthermore, we believe the steel sector outlook has turned positive, owing to the easing of the US-China trade dispute and the positive outlook for domestic demand on increasing infrastructure & housing market activity,” Lee said.
CSC is to announce its second-quarter quotation prices on Friday. In November last year, it announced that it would trim quotation prices by an average of 3.03 percent for first-quarter deliveries.