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CSC China Steel : Prices Announcement for Domestic Sales in the Fourth Quarter of 2019

On August 23rd, 2019, China Steel Corporation (CSC) held a domestic price meeting for the fourth quarter domestic sales and announced the following statement:

According to IMF’s World Economic Outlook, July edition, the global economic growth projection is slightly revised downward by 0.1% to 3.2% in 2019, same as the World Bank’s forecast in May, but the economic growth is expected to rise to 3.5% in 2020, signaling possible improvement in global economy and strengthening in growth momentum.

On August 13th, the US President Donald Trump announced to delay nearly 60% of the new 10% tariff on US$300 billion worth of Chinese imports goods from September 1st to December 15th. The China-US trade conflict is expected to sustain for a while. Since July 2018 the US imposed 25% tariff on $50 billion worth of Chinese imports, the global supply chain and market are adjusting underway. Prudential measures should be taken in response to recent economic prospect.

Central Bank of the Republic of China, Chung-Hua Institution for Economic Research, and Taiwan Institute of Economic Research all forecast Taiwan economic growth to be more than 2% this year, and the 2ndhalf of this year will be better than the 1stone. With the government’s active engagement in pushing up domestic demand through public constructions, order-transfer effect and the homecoming of Taiwanese companies caused by the US-China trade conflict, Taiwan’s fourth-quarter economic and industrial performances are projected to be further improved.

The iron ore prices had skyrocketed since the beginning of 2019. The accumulated increase is up to 90% by the end of July and still more than 50% even with the price drop in August.

Considering the market condition and operating situations of downstream industries, CSC had been absorbing the cost hike to relief the pressure of downstream customers. However, as the abilities of major steel mills to continue the cost absorption have reached the limits and the fourth quarter is the traditional peak season, thus major steel mills in the US, Japan, China and Korea have announced price increases one after the other. According to news reports, Nippon steel has successfully increased wholesale steel prices to auto makers by ¥4,000/MT. It’s expected that the steel prices and transaction volumes in the fourth quarter should be improved.

Steel mills around the world are still facing operating challenges. As operating pressures in downstream industries persists, in order to support public constructions and seize the business opportunities for those Taiwanese companies moving back from China, CSC has decided to keep the fourth quarter price flat for most steel products and moderately increase the prices for 2 steel products as a result of improved market conditions. In order to increase the order-taking momentum of downstream customers and avoid inventory losses, CSC has made moderate and stable adjustments, coupled with multiple programs and supplementary measures, to the fourth quarter prices. The adjustments of each steel products are shown as the following Table.
Prices Announcement for Domestic Sales in the Fourth Quarter of 2019:

Products
Average Adjusting Amount(NTD/MT)
Plates
+0
Bars and Rods
+0
HRC
+0
CRC
+0
EG
+0
ES
+255
GI
+173

Source: CSC – China Steel Corporation

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