China Steel announces price cut in response to China’s excessive exports

China Steel Corp, the nation’s largest steelmaker, yesterday announced that it would cut steel quotation prices for domestic deliveries next month — its first price cut across the board since August last year — as the global steel market grapples with China’s excessive exports of low-priced products.

The move also reflects weak sentiment in the market dented by factors such as extreme weather, financial market turmoil and the off-season effect in summer, the Kaohsiung-based company said in a statement.

While the prices of iron ore have recently dropped to US$100 per tonne and those of coking coal have fallen to between US$210 and US$220 per tonne to help cut steelmaking cost, they are still at relatively high on a long term basis, it said.

As a result, the company said it would lower the price of benchmark hot-rolled steel plates and coils by NT$600 per tonne and cold-rolled steel plates and coils by NT$500 per tonne.

The company would also decrease the price of electro-galvanized steel coils, hot-dipped, zinc-galvanized steel coils and electro-magnetic steel coils by NT$500 per tonne each, it said.

“We will moderately lower prices in September to help domestic downstream customers secure orders and lessen the impact of low-priced steel imports,” China Steel said in the statement.

The company said the oversupply situation in China has continued to worsen, leading to a large number of low-priced products being exported.

ArcelorMittal SA, the world's second-largest steel producer, earlier this month said China’s aggressive exports were creating problems for the global steel industry, while China Baowu Steel Group Corp,  the world's largest, this week warned of a severe industry crisis as steel prices collapse.

In the first seven months of this year, exports of steel from China increased 21.8 percent year-on-year to 61.23 million tonnes, while average export prices decreased 24.8 percent from a year earlier, both adding pressure on the global steel market, China Steel said, citing data compiled by the Beijing-based China Iron and Steel Association.

Countries including Vietnam, Thailand and Turkey have recently responded with trade measures, including anti-dumping complaints against China’s hot-rolled steel products, the company said, adding that it would also apply for trade remedy measures in Taiwan to curb the arrivals of low-priced steel products from China.

On Tuesday, the company reported its net profit in the first half of the year surged 635.58 percent year-on-year to NT$1.96 billion (US$60.7 million).

Earnings per share rose to NT$0.13 from NT$0.02 in the same period a year earlier.

Consolidated revenue in the first seven months grew 1.2 percent annually to NT$217.6 billion, the company said in a regulatory filing.