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May 30, 2017

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Experts expect China Steel, Chung Hung to raise prices

TAIPEI, Taiwan -- China Steel and Chung Hung Steel may raise prices by nearly NT$900 a ton after the Lunar New Year break to reflect a rise in raw material cost, analysts said yesterday.

According to analysts, sales of steel would lose steam ahead of the nine-day New Year break, which begins this Saturday. Yet, on Feb. 27 when China Steel announces its wholesale prices for April and May, it may report a "significant" price increase, analysts said.

It is expected the firm may raise prices by an average US$30 a ton, or approximately NT$886, experts said.

Analysts attributed the possible price increase to a rise in the cost of raw materials, such as iron ores and slabs, the latter of which now cost US$550 a ton.

Chinese steel operators, in fact, have already raised prices to respond to the raw material cost hike. For example, hot-rolled steel sold in Shanghai saw a price increase of 50 yuan per ton.

China Steel, Taiwan's largest steelmaker, earlier this year reported its March wholesale prices. During the event the firm said that an average increase of NT$700 a ton for the first quarter may not necessarily reflect an increase in cost. The remarks hinted at the possibility that there is still room for more price hikes.

Making things worse, a recent depreciation of the New Taiwan dollar, and conversely a more expensive greenback, will add to China Steel's import cost, analysts said, adding that if China Steel raises prices by US$30 a ton, Chung Hung will follow suit.

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