Prices Announcement for Domestic Sales in the First Quarter of 2020

2019-11-22

On November 22^nd, 2019, China Steel Corporation (CSC) held a domestic price meeting for domestic sales in the first quarter of 2020 and announced the following statement:

According to the latest report of IMF, the global economic growth rate is estimated to be 3% for this year. Although the data is 0.2% lower than the previous estimation in July, the global economic growth rate is expected to reach 3.4% in 2020. Meanwhile, worldsteel estimates the global steel demand will continue to grow by 1.7% in 2020, to 1.806 billion tonnes, reflecting the global economic recovery.

In terms of Taiwan, major research institutions such as The Central Bank of Taiwan, CIER(Chung-Hua Institution for Economic Research), TIER(Taiwan Institute of Economic Research), and IHS Markit all estimate the economic growth rates will rise above 2% for this year, and rank highly in the developed countries of Asia. The demand of the domestic steel industry is expected to be benefited by the public construction program and the green energy industry like offshore wind farm, as well as the trend of oversea Taiwanese businesses return and the order transfer phenomenon. Looking forward to 2020, the trend of economic growth is expected to be remained, and the environment of enterprise operating will be better than 2019.

Due to the rapid changes in the international political and economic environment, manufacturers in various countries have actively adjusted the supply chain arrangement in order to diversify risks. In the same time, major countries have cut the interest rates in this year, driving funds for investment, stimulating consumption effectively and leading the terminal demand emerges gradually.

While the adverse factors affecting the global economy faded out, the market confidence has recovered gradually. In United States, the Manufacturing Purchasing Managers' Index (PMI) rose to 51.3 in October, which is stable above the expansion line of 50. At the meantime, the price index and private consumption data of US also keep steady, allowing US steel mills to announce the second wave of price increase, and successfully reached a total increase of US$88 per tonne. The global steel market atmosphere has turned from cautious to optimistic, and the trend of recovery getting clearly and stronger since the CFR Vietnam price of low-priced HRC from India, Brazil and Russia have increased more than US$20 per tonne, without counter. The Vietnam’s steel mill FHS also announced the HR price in January next year will rise US$20 per tonne. In China, the published price of major steel mills in December stay unchanged.

Since the end of 2018, the major steel mills in the world have been affected by the increasing cost of ironmaking raw materials and the sharp decline in steel product prices. The profitability has been seriously reduced, and the operating have been in severe condition and even fall into losses. Considering Q1 is the traditional off-season of steel industry, and the working days is fewer than normal. Although the global steel market atmosphere is expected to turn optimistic in the near future, and the recession cycle of steel industry is anticipated to come to an end as one and a half years pass, CSC decide that the price of Q1, 2020 will be properly adjusted after considering customers’ opinions and internal evaluation, in order to assist downstream customers to de-stock and enhance their export competitiveness. Meanwhile, the price decision will help narrow the price gap between the published price announced quarterly and the international market price, since the current price announcing time of CSC is earlier than the most of global steel mills.

In addition, in order to cooperate with the adjustment of the new price system in next year, CSC will explain how the new pricing system and the related supporting solutions works to all customers before CSC announce the price of Q2, 2020. The new system will ensure that both customers and CSC share risks and benefits in a fair and equitable manner, and will be in line with the international market, balancing the interests of customers, employees and shareholders. The adjustment ranges of each steel products are shown as the following Table, the average decreasing rate is 3.03%.

 

Prices Announcement for Domestic Sales in the First Quarter of 2020:
Products	Average Adjusting Amount(NTD/MT)
Plates	-1,174
Bars and Rods	-1,000
HRC(Excluding RRQ)	-1,187
CRC	-1,000
EG	-900
ES	-900
GI	-1,078

Information Origin : http://www.csc.com.tw/CS/CSC_E/NC/neli/neli.aspx   

Back