On November 25th, 2016, China Steel Corporation (CSC) held domestic price meeting for 1st quarter, 2017 shipments and announced the following statement:
The ECB’s loose monetary policy has effectively eased the deflationary pressure. With fiscal budget improvement of major countries, EU economy maintains steady recovery. The outcome of the US presidential election offsets the market uncertainty. Fed is expected to raise interest rate. US new government’s policy of tax reduction and expansion of infrastructure spending will sustain the growth momentum for US economy. China’s October foreign trade remains tepid. However, stimulated by the fiscal expansion policies, Chinese industrial production improves, and industrial PMI reaches record high in 2 years. As the year-end holiday season of western countries propping up the demand for restock, both Taiwan’s index of Industrial production and October export performance keep on upward trend. In general, IMF predicted a 3.4% growth for global GDP in 2017, which is better than this year.
The further demand over supply for global coking coal has brought spot premium hard coking coal prices to FOB US$ 305/MT from FOB US$100/MT in early July, and the contract prices for next quarter are about to exceed US$ 280/MT. In the meantime, iron ore prices also jumped to CFR US$ 80/MT from US$ 50/MT, the steel production cost of 1st quarter in 2017 is expected to increase by US$ 150-200/MT from 3rd quarter this year as a result. Driven by the surge in raw material costs, major steel mills raise steel prices consecutively. US mills have raised sheet prices accumulated by at least US$ 110/MT in three waves, which leads to a strong market price rebound. Steel mills in China, like Bao Steel, Wisco and Angang, have increased December domestic HR prices for around RMB 300-450/MT, which triggered a price hike by over RMB 840/MT in domestic market since October. In Asia, leading integrated steel mills including Japanese and Korean producers pushed up January HR offer prices to CFR US$ 510-530/MT, an increase by over US$ 100/MT.
Supported by higher raw material costs, global steel prices keep rising. With downstream restocking demand emerging gradually and major steel mills filling out order books, steel market keeps booming globally. Due to the stimulation of global prices hikes, domestic market prices and export prices for major steel products have reflected the upward trend. With CSC’s price lagging behind international price levels, it’s necessary for CSC to catch up. In consideration of Taiwan’s steel downstream industries’ international competitiveness and cost transfer ability, CSC has decided to adjust the domestic prices for 2017 1st quarter deliveries by an average of 12.6% or NT$ 2,265/MT. Details are listed below.