Taiwan’s China Steel Corp (CSC) has announced a reduction in domestic steel prices for deliveries in July, citing sluggish demand. However, the company remains optimistic about a recovery in demand during the second half of 2023.
The recovery in China, following the lifting of lockdown measures, is not robust enough to sustain its steel demand, while manufacturing momentum in Europe and the United States is slowing down. Nevertheless, CSC expects China to expedite bond issuance in the latter half of the year to promote infrastructure development and relax real estate policies.
On the other hand, the automotive market in Taiwan has displayed strong sales figures, and the advancements in AI and high-performance computing are expected to drive related demands. Moreover, the Taiwanese government has allocated a budget of TWD 680 bln (USD 22 bln) for public infrastructure projects, which is anticipated to contribute to steel demand in the second half of the year.
Due to overproduction in Chinese mills since April, international steel prices have undergone successive downward revisions. The significant decline in steel prices has shaken market confidence. To prevent further losses, Chinese mills have adjusted their export prices, resulting in stabilized and rebounded market conditions. Both Baowu Steel Group and Ansteel Group have maintained flat prices for their domestic steel products to be shipped in July, signaling price stabilization and bolstering market confidence. As the market refocuses on fundamental supply-demand dynamics, it indicates a decrease in speculative activity related to coal and iron prices. The prices of ore and coal are fluctuating around USD 110-120 per ton and USD 220-240 per ton, respectively, indicating a potential stabilization or reaching a price bottom.
To accommodate downstream customers’ adjustment and competitiveness, CSC is implementing a gradual and cautious price adjustment strategy to align its prices with the main steel price trend. The pricing for July and the third quarter will be determined based on the expectations of downstream customers and market trends. Steel prices are expected to rebound in July, presenting an opportunity for downstream customers to replenish their inventories at a low point and prepare for the next market upturn.
As part of its latest adjustments, CSC will decrease the domestic prices of hot-rolled plates and coils delivery by TWD 1,200 (USD 39) per ton for July. Additionally, the price of cold rolled steel will be reduced by TWD 1,500 (USD 49) per ton. CSC will also reduce the prices of EG and GI by TWD 1,000-1,200 (USD 32-39) per ton for deliveries in the following month.
1 USD / 30.8 TWD