China Steel price increases for Q2
10 March 2017
Taiwan’s largest steel maker, China Steel Corporation, announced across grade increases in domestic prices for the second quarter 2017 averaging 6.9%. Rod and Bar prices will increase by TWD 1200/tonne – around 37 euros.
Reviewing positive global economic conditions CSC noted new US government policies including fiscal expansion and infrastructure reconstruction, expected
to stimulate domestic demand and motivate economic growth momentum. Quantitative easing monetary policy has made Eurozone economic growth better than
expected and Japan saw moderate recovery in economic confidence. CSC also referred to steady economic growth in China, due to expanded private investment
and fixed capital expenditure. China Steel quoted the IMF’s forecast that 2017 global economic growth would be 3.4%, 0.3% higher than 2016.
Taiwan, CSC said, benefited from the global economic recovery and performed well on export and industrial production. The Taiwanese government also budgeted
trillions of NT Dollars on expanding public infrastructure investment, in recognition of which the Directorate General of Budget, Accounting and Statistics
had raised its 2017 domestic economic growth rate by 0.42% to 1.92%.
Steel usage has been driven by US railway, public facilities and Infrastructure construction; China’s ” One Belt, One Road” development; and the demand
for Olympics construction in Japan. These are expected, says CSC, to “trigger a new bloom of global steel demand”. CSC also notes that China has “reinforced
supply-side reforms, such as eliminating all low-quality steel products, which helped to improve the global overcapacity situation”.
Considering raw material, CSC said “Recently, the rebound of coking coal price and sharp increase of iron ore price, compelled main mills to raise steel
price to cope with high production cost, and the price increase has exceeded USD 100/MT within this six months.” CSC cited increases from Baosteel
in Mainland of between USD 117~310/MT, with further increases expected in April. Major mills in Japan and Korea have also raised export prices significantly
and CSC expects another “international steel price hike in the second quarter”.
China Steel concluded that its prices were “significantly behind the international market” while it continues to feel pressure from high material costs.
It believed there was “substantial room for price increase” but had taken into account “downstream competitiveness and their capability to transfer
costs to their customer”. CSC had, therefore, decided not to fully reflect its costs but “only moderately refer to international market, and raise
prices for domestic sales in the second quarter by an average TWD 1,396/tonne, that is 6.9%”.
