UPDATE: China Steel To Cut Jan-Feb Domestic Prices By Average 1.33%
November 26 2009 - 2:50AM
Dow Jones News
Taiwan's China Steel Corp. (2002.TW) will cut the domestic
prices of its steel products in the January-February period by an
average of 1.33% from December, the company said Thursday.
The company decided to cut the prices despite strong steel
demand in Asia because of weaker-than-expected demand from its
local downstream customers and due to traditionally weak demand
during the Chinese Lunar New Year in February, Taiwan's largest
steel producer by revenue said in a statement.
This is the company's second consecutive cut in the prices of
domestic steel products after it lowered December prices by 4.45%.
The latest round of cuts will mean an average decrease of NT$280 a
metric ton in the period.
The price cuts will range from NT$1,384/ton for steel plates,
used in construction, to NT$129/ton for cold-rolled sheets and
coils, which are used in the car industry, according to the
statement.
Prices of hot-dip galvanized coils and sheets, used in car parts
and computer casing, will be cut by NT$1,157/ton, while prices of
hot-rolled sheets and coils, used in steel pipes and car
components, will remain unchanged, China Steel said in the
statement.
The company decided to cut steel-plate prices in a move against
cheap imports from Japan and South Korea, it said.
Since the company has a practice of giving price rebates for the
previous period if cuts are planned for the subsequent period, the
January-February price cut effectively means an additional price
cut for the December period as well.
China Steel sells about 75% of its production domestically and
the rest to other Asian countries, with two-thirds of the exports
going to China and Japan. Since a large part of the company's
domestic output gets exported by China Steel's domestic customers,
over half of the company's total output eventually goes
overseas.
China Steel's January-September net profit plunged 90% from a
year earlier while revenue slumped 43% because of weak steel prices
in the first half.
Regarding next year, steel demand from China will likely lead to
an iron ore price hike of 30%-35% by the three large iron ore
miners, China Steel said, referring to Brazilian miner Vale SA
(VALE) and Anglo-Australian diversified miners BHP Billiton Ltd.
(BHP) and Rio Tinto PLC (RTP).
"Due to the boost from both higher (production) costs and
stronger demand, the trend of higher steel prices in Asia will
likely be stronger next year than this year," China Steel said.
-By Alex Pevzner, Dow Jones Newswires; 8862-2502-2557;
alex.pevzner@dowjones.com