China Steel Corp (CSC, 中鋼) on Friday announced that it would cut steel quotation prices for domestic deliveries in the third quarter to reflect increasing uncertainty that has resulted in a wait-and-see approach in the global steel market.
It would lower the price of benchmark hot-rolled sheets and coils by NT$1,000 per tonne and cold-rolled sheets and coils — which are used in the automotive industry — by NT$941 per tonne, the Kaohsiung-based steelmaker said in a statement.
CSC would also decrease the price of electro-galvanized sheets by NT$600 per tonne, electrical sheets by NT$750 per tonne and hot-dipped, zinc-galvanized sheets by NT$800 per tonne, it said.
To support the export competitiveness of domestic downstream customers, the company has decided to also drop the price of steel bars and rods by NT$1,066 per tonne, and steel plates by NT$529 per tonne, it said.
“Due to the unresolved trade conflict between the United States and China, international political and economic uncertainty has increased, affecting global economic growth momentum this year,” CSC said in the statement. “Global uncertainties have caused short-term turmoil in the international steel market, and end users have reduced their inventory levels in response.”
As the costs of raw materials such as coking coal and iron ore remain high, major international steel mills have adjusted their strategies to avoid losses, with China Baowu Steel Group (中國寶武鋼鐵) and Shougang Group Corp (首鋼) leaving their product prices unchanged for next month’s shipments, CSC said.
The firm said that international steel prices have no room to fall in the short-term, as “high raw material costs have supported steel prices even with the sluggish market.”
“In the future, if the US-China trade negotiations turn positive and the market’s wait-and-see atmosphere dissipates, restocking demand will ... boost international steel prices once again,” CSC said.
The company’s latest move highlights how fast market dynamics have changed over the past three months.
In early March, CSC raised its steel quotation prices for most products for this quarter by NT$300 to NT$490 per tonne, and gave a positive outlook for the year on the back of healthy supply-demand dynamics in Japan, South Korean and China, as well as seemingly relaxed trade tensions between the US and China.
The trend toward unfavorable international steel prices and weaker downstream demand might further squeeze the company’s gross margin due to higher feedstock costs.
Source: TAIPEI TIMES