China steel Hikes Steel Prices
Taiwanese steel maker China Steel Corp announced last week that it would raise domestic steel prices next quarter at an average rate of 1.9%, due to increasing raw material costs from rising demand on an improving economic outlook. After more than one-year evaluation and preparation, CSC decided to apply monthly and quarterly pricing simultaneously from 2nd quarter of 2020. Pricing for HR(RRQ), HRC, CRC, ES and GI are adjusted monthly in line with global market trend, and moderately applying diversified complementary measures to fortify downstream competitiveness. Pricing for plates, bars and rods, automobile and home appliance steel, etc. are adjusted quarterly to stabilize the industrial development. The new pricing system aims to achieve fairness, risk sharing and to create greatest benefits for customers, employees and shareholders.
CSC said “The steel demand of second quarter is typically strong. However, to support downstream customers, CSC has reduced price several times before, and the price of 1stquarter of this year is far below international steel price. Considering the improvement of steel markets and increasing raw material costs, the global major steel mills have started to rise their selling prices in order to overcome the difficulties of heavy losses. US steel mills have increased their selling prices of HR and CR several times. The accumulative increase is up to US$ 190/MT. Steel markets in emerging countries such as Indian, Brazil and Russia tend to stable, and steel prices of these countries have increased US$ 100/MT. European mills start cutting steel production since last year, and the steel prices in Europe are also going up. Vietnam FHS rose their HR price in the 1stquarter of 2020 totally US$ 50/mt higher than previous quarter. Japanese and Korean mills plan to gradually close and/or maintain their production lines. Therefore, supply of steel is shrinking, and steel prices in near future have great possibility to be increased.”
CSC added “Due to the outbreak of coronavirus disease COVID-19 in China before Lunar New Year, which forced factories to extend the holiday and disrupted global supply chain, in order to stabilize the market, Chinese steel mills keep the price level unchanged for March shipment, waiting for peak season in 2ndquarter. Based on the experience from SARS, China Iron and Steel Association assess that the impact of disease on economy should be short-term, and transportation and logistics will recover to normal as the disease gradually ease. In addition, as the government roll out economy stimulus measures such as tax reduction, CISA expect there will be strong demand release in middle or late March and the market will rebound soon.”
Source : Strategic Research Institute