China Steel Corp. (2002.TW), Taiwan's largest steel producer by revenue, plans to keep domestic prices of most steel products for the July-August period unchanged, citing concerns over the rising global uncertainty associated with the European debt crisis and impact from recent hikes in local fuel and power prices.
"Considering downstream clients affected by global political and economic uncertainties and the impact from domestic hikes in fuel and power prices, we decided to keep most prices for July and August unchanged," China Steel said in a statement Thursday.
Executive Vice President Steve Lee told Dow Jones Newswires that the company will slightly lower July-August prices only for cold-rolled and hot-dip galvanized coils used for automobiles by 2% from June, in order to help expand automobile exports.
"Overall demand is still not so good, but we are unable to cut [most] prices [to boost demand] as we need to consider the company's profitability," Lee added.
China Steel is keeping prices unchanged for June. It had raised April-May prices by an average of 1.11%, while it kept prices unchanged for March after cutting January-February prices by an average of 7.08%.
The company's move was in line with analysts' expectations.
Grand Cathay Securities analyst Tsai Yen-ling said steel demand hadn't recovered in the first quarter at a quick pace as most people had expected and that a modest recovery in demand couldn't be used to justify any price hikes in the near term.
"It will be a tough year for the company. External demand will likely remain weak due to the lingering euro-zone crisis, and higher domestic electricity rates will also start to hurt the company's profits later this year," Tsai said.
China Steel sells about 75% of its output domestically and the rest to other Asian countries, with two-thirds of the exports going to China and Japan.
Source: China Steel Corporation