Steel Giants Slash Prices: A Look at the Current Market Scenario
Steel giant China Steel reduces domestic prices due to decrease in demand.
By Lisa Wang, Staff Reporter
In a surprise move, China Steel Corp (中鋼), the country's leading steelmaker, has announced drastic price cuts of NT$600 per tonne for domestic deliveries next month. This decision comes as customers exhibit caution in their demand outlook, struggling with foreign exchange rate volatility.
According to China Steel's statement, the New Taiwan dollar's sharp appreciation against the US dollar could jeopardize export growth momentum, though the nation's economy remains robust, expected to expand by 2.9% this year, per IMF estimates. The company noted that downstream processing industries are currently grappling with the NT dollar's recent revaluation.
To support downstream steelmaking customers and help safeguard their competitive edge in securing new orders, China Steel is initiating extensive price reductions for June deliveries.
The company's price adjustments mirror the downward trend in steel prices across Asia. For example, Angang Steel Co (鞍本鋼鐵) in China has recently lowered prices for certain steel plates, and Formosa Ha Tinh Steel Corp (台塑河靜鋼鐵興業) in Vietnam has cut hot-rolled steel prices by US$17 per tonne.
Meanwhile, demand in the US and European markets seems to be waning, while costs for essential raw materials like iron ore and coking coal remain steady between US$95 and US$100 per tonne and US$185 to US$195 per tonne, respectively.
As the US and European markets slow, and raw material costs remain stable, steelmaking companies are evaluating their pricing strategies. This move by China Steel and other Asian steel giants could be a strategic response to these market dynamics, aiming to stimulate demand and maintain competitiveness.
Overall, a combination of market demand, global economic conditions, competition, production capacity, and seasonal factors play roles in the pricing decisions of major steel companies. However, without specific data from June 2023 for these companies, these factors remain speculative but essential in understanding the broader context of steel pricing strategies.
The price cuts announced by China Steel Corp could impact the finance sector, as downstream processing businesses may require additional funding to maintain their competitive edge in the market. Additionally, the decision by China Steel, alongside Angang Steel Co and Formosa Ha Tinh Steel Corp, to lower their prices might be a strategic response to the current business environment, aiming to stimulate demand and sustain competitiveness across the finance and industry sectors in Asia.
