Price Adjustment for 2018FirstQuarter Domestic Prices

2017-11-27

On November 24th, China Steel Corporation (CSC) held domestic price meeting for the first quarter (January – March) shipments and released the following statement:
IMFrevised upits prediction for 2017 global economic growthagain and forecastedcontinued economic expansionfor next year. The economic growthin Euro area is beyond expectationbecausethe European Central Bank maintains loose monetary policy.Benefited fromproposedcorporate tax cuts and FED’s plan of gradual interest rate hikes, US economy is strengthening. Japan‘s strong domestic demandand robust exports keep driving its economy growth.China’s economy is on track for steady growthas a result ofthe structural reform and increased domestic demand as well as infrastructure investment. Meanwhile, Taiwan's DGBASreleasedthe latest outlookpredictingGDP to grow by 2.27% in 2018, higher than this year due to strong exportsand industrial production.

The latest forecast byWorldsteelindicates the global demand will grow by 2.8% and 1.6% respectively in 2017 and 2018.With China’s strengthening in supply-side reform and major steel mills’production cut due to maintenance,supply is tight hence supportsglobal steel prices. Bars, rods, and plates prices continue to increase and hot-rolled steel prices rebound because of shortage in hot metal from blast furnace mills.American steel mills announceUSD 77 /MT price hikes in October and November which raisehot-rolled steel pricestoUSD 690 /MT.In Europe, the final determination in the antidumping duty investigationbrings the hot-rolled price rose to USD 630 /MT.Japanese mills are facing increased demand and priceshike both in domestic and export market.NSSMC’s price quotes on hot-rolled steel to South-eastern Asia are steadily aboveUSD 600 /MT.As Chinese steel mills’ list prices in the fourth quarter remain moderately high, the winter production restrictions on steelmakers from mid-November to mid-March next year are expected to lead to production cuts of as much as 60 million toneswhich results in inventory reduction.Inthe first quarter next year, steel pricesare expected to rise, led by restockingpost Christmasholiday in Western countriesand the winter productionrestrictions in China.

Taiwan’s steel import prices are surging, particularly affected by declining in supplies and booming in pricesof bars and rods in China. The increase inCSC’s fourth quarter list prices is moderate. In summary, consideringthe downstream customers’ competitiveness,cost transfer’s situation, supply and demand balance of steel products, CSC decides to remain the Q1 prices of CRC, EG, and ES unchanged but moderately increase the prices of plates, bars, rods,HRC, and GI.

The averaging adjustment is a slight increase of NTD 327/MT, or 1.5%.