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China Steel slashes July, August prices on cooling demand

MILD SUMMER:As the industry steels itself for the slow season, CSC said it cut prices for some of its products to help its clients stay globally competitive

China Steel Corp (CSC, 中鋼), the nation’s only integrated steelmaker, yesterday cut its domestic prices for July and August shipments by an average of 1.64 percent compared with those for June over slowing market sentiment.

“We have set our prices at a level that allows our clients to compete with others around the world,” CSC vice president for sales Liu Jih-gang (劉季剛) said by telephone yesterday.

US demand for steel products manufactured by China Steel’s clients is high now, but prices are set to drop next quarter as the industry enters its slow season, Liu said.

Meanwhile, demand for steel products produced by the company’s clients in Europe is low because of the region’s slower-than-expected economic recovery, Liu said, adding that CSC’s customers also have to compete with Japanese firms benefitting from a weaker yen.

Demand from Southeast Asia has also been dampened by political unrest in Thailand and Vietnam, he said.

In China, sentiment is low there because the Chinese government has not cut excess steel production effectively, Liu said.

Daily crude steel production in China increased to 2.3 million tonnes in the second half of last month, up from 2.29 million tonnes in the first half, Liu said.

After the Organisation for Economic Co-operation and Development last month downgraded its global economic growth forecast for this year to 3.4 percent, from the 3.6 percent it forecast in November last year, other steel demand forecasts may follow suit, China Steel said.

Meanwhile, the price of iron ore — a raw material used to make steel — has also dropped to below US$100 per tonne, giving the company another incentive to cut prices, Liu said.

Given the weaker demand, the firms expects shipments this quarter to reach 3.06 million tonnes, slightly lower than the 3.08 million tonnes it forecast a month ago, Liu said. In the next quarter, China Steel expects to sell 3.16 million tonnes, he added.

The price of benchmark hot-rolled sheets and coils are expected to drop by NT$479 per tonne, while the price of cold-rolled sheets and coils are to decline by NT$363 per tonne.

Electrical sheets, which are used to manufacture home appliances, are set to cost NT$536 less per tonne, while the price for hot-dipped, zinc-galvanized sheets are to dip by NT$53 per tonne.

China Steel kept its prices for steel plates, steel bars and rods and electro-galvanized sheets.

The company’s stock added 0.6 percent to close at NT$25.15 yesterday, underperforming the TAIEX’s 0.73 percent rise.

Source – The Taipei Times

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