NO CHANGE:The company said that as market sentiment was expected to bottom out, there would be no further cuts in the price of its steel for the domestic market
China Steel Corp (CSC, 中鋼), the nation’s only integrated steelmaker, yesterday announced that prices for the domestic market for September would remain unchanged, as it expected market sentiment to bottom out.
On May 28, China Steel cut domestic prices for July and August shipments by an average of 1.64 percent compared with June shipments, as the third quarter is a traditionally slow season for the industry because of the rainy season in Southeast Asia, Ramadan in Muslim countries and the summer vacations in Europe and the US, it said.
However, the company has started to see signs of recovery, and it deemed it unnecessary to cut prices further, vice president for sales Liu Jih-gang (劉季剛) said in a phone interview yesterday.
“Three major Chinese steel companies, Baosteel Group Corp (寶鋼), Wuhan Iron and Steel Corp (武漢鋼鐵) and Anshan Iron and Steel Group Corp (鞍鋼) all stopped cutting their prices and chose to keep them unchanged,” Liu said.
The stimulus plan and infrastructure construction conducted by the Chinese government boosted its GDP and purchasing manager index, resulting in figures that were higher than analysts estimated, the company said.
Although steel prices in Europe are low — as many steel companies start conducting annual maintenance — it is unlikely that prices are to to drop further in the future, the company said. As for the US, steel prices were sustained by the high demand resulting from a growing economy, it said.
Prices for coal and iron ore, the raw materials for making steel, also began to rise, Liu said. According to Liu, the price for iron ore dropped to US$90 per tonne three weeks earlier, but the trend subsequently reversed and increased to about US$98 per tonne yesterday.
Downstream companies would not wait until September to replenish their inventories if the company’s prices in September were not lower than in previous months, Liu said.
After September, the industry would enter its peak season, as many companies attempt to finish their construction projects by the end of the year, Liu said.
Liu said China Steel aims to sell 3.16 million tonnes of steel this quarter, up 4.64 percent from the 3.04 million tonnes it sold last quarter.
The 3.04 million tonnes of steel it sold last quarter was 0.65 percent lower than its target of 3.06 million tonnes, the company said.
Last quarter, the company reported a pretax profit of NT$6.62 billion (US$220.78 million), up 30.57 percent from NT$5.07 billion a year ago and 1.38 percent from NT$6.53 billion from the previous year, according to the company’s filing to the Taiwan Stock Exchange.
The year-on-year profit increase was due to China Steel’s effort to cut costs, while the quarter-on-quarter increase was because of fewer working days in the first quarter, it said.
Source – The Taipei Times