Impact of China Steel Price Hikes on Global Markets
China Steel Corp has announced that it will increase its domestic steel prices by as much as NT$1,200 (US$39.59) per tonne for delivery in the coming month, citing the escalation of raw material costs and an upward trend in global markets. The price hike has been attributed to the surging cost of iron ore and coking coal, as well as the robust demand for steel post-COVID-19 pandemic in China, Europe, and the US. These factors have led to an increase in the outlook for the second quarter, with the Chinese integrated steelmaker highlighting Beijing’s tighter control over crude steel production. The company has indicated that its price increases reflect similar moves by international peers, including US-based Nucor Corp and Cleveland-Cliffs Inc, South Korea’s Hyundai Steel Co, and China’s Baowu Steel Group Ltd.
In December last year and last month, China Steel Corp similarly increased its prices, citing strong restocking demand for steel used in home appliances, machinery, and vehicles. The latest adjustments include price increases of NT$1,200 per tonne for hot-rolled steel plates and hot-rolled carbon steel, while the price of hot-rolled steel coils would increase by NT$900 per tonne. Meanwhile, cold-rolled steel coils would increase by NT$1,000 per tonne. Hot-dipped, zinc-galvanized steel coils used in construction and enameled steel would increase by NT$1,000 per tonne, while those used in home appliances and computers would rise by NT$600 per tonne. The price of electrical sheets would also rise by NT$600 per tonne.
Despite a decrease in consolidated revenue last month due to the Lunar New Year holiday resulting in fewer working days, the company’s revenue outlook for the first quarter remains promising, buoyed by the robust inventory replenishment from customers and an uptrend in global steel prices. The company is optimistic about market momentum remaining solid through the second quarter, traditionally a high season for the industry, citing a gradual recovery in the global economy and reconstruction demand after a devastating earthquake hit Turkey and Syria last week. In 2021, China Steel Corp’s pretax profit dropped by 72 percent to NT$23.26 billion, as revenue declined 4.01 percent to NT$449.57 billion.
