China Steel leaves domestic wholesale prices unchanged

Taipei, July 20 (CNA) China Steel Corp., Taiwan's largest steel maker, said Saturday that it has decided to leave domestic wholesale prices for its steel products unchanged for September deliveries, compared with July-August contracts. After a 4.66 percent price cut for July-August deliveries, local steel prices have stabilized on the back of steel price hikes in the international market, China Steel said. It was the first time for China Steel to keep its domestic wholesale prices intact after it started to slash prices for June-August deliveries as the global economy showed signs of slowing. The company lowered its domestic wholesale prices for June contracts by 2.08 percent. China Steel said as international steel prices made a recovery recently, downstream steel makers in Taiwan have witnessed export prices rebounding accordingly. China Steel said the recent hikes in the international steel prices partly reflected a decline in inventories in the industry, while many steel makers have suspended production for annual maintenance to cap production at a time of higher electricity rates for summer time or power rationing. However, as the third quarter remains a slow season for the steel industry, China Steel, a major local upstream steel maker, decided to leave domestic wholesale prices unchanged. China Steel's latest pricing strategy followed its Chinese counterpart -- Baoshan Iron and Steel Co. -- which had decided earlier this month to keep its steel prices the same for August contracts. In fact, some other Chinese major steel makers and steel companies in Japan and South Korea have raised their prices, China Steel said, indicating there was little room for local steel prices to go down further. It said the decision to leave China Steel's domestic wholesale prices unchanged is expected to allow its customers to understand that steel prices already have got support, hoping they will not postpone their purchase plans in a bid to wait for another price cut from China Steel. In the first six months of this year, China Steel posted NT$12.21 billion (US$407 million) in pretax profit on consolidated sales of NT$173.16 billion. In June alone, China Steel's earnings before tax stood at NT$1.57 billion, while consolidated sales totaled 25.88 billion. Market analysts said based on the statistics, China Steel is likely to report about NT$8 billion in net profit for the six-month period, sharply higher than NT$1.95 billion recorded in the same period of last year. In the first half of this year, domestic sales accounted for 65 percent of China Steel's total revenue, the company said. (By Wei Shu and Frances Huang)