Taiwan-based China Steel raised quarterly domestic steel prices on Feb 21 by NT$600/mt ($19.73/mt) and prices of steel bars and rods by NT$500/mt for sales in the second quarter (Q2) or April 2020.
China Steel Corp (CSC) has decided to apply monthly and quarterly pricing simultaneously from Q2 to better adapt to everchanging global steel market conditions. CSC will raise Q2 domestic steel prices by 1.9pc considering increase in raw material costs and improving economic growth in Taiwan.
Prices of steel products used in the auto industry or to make boats are exempted from any price increases for the next quarter to support the industry. Henceforth CSC will adjust the prices of steel for these sectors on a quarterly basis to stabilise industrial growth.
For monthly sales, the prices for HRC (including API) were raised by NT$300/mt and CRC by NT$500/mt, structure steel and coated steel by NT$500/mt.
Why are steel prices rising in Taiwan?
US-China trade tensions had led steelmakers to cut steel prices successively in 2019 and the prices dropped below the global average. With the signing of the Phase one US-China deal prices are expected to rise in the near term. In Taiwan, new infrastructure developments have initiated supply chain restructuring and many Chinese firms are shifting their production lines to Taiwan. Taiwan’s adjusted GDP in Q4 2019 was 3.31pc.
Global supply chains have been disrupted due to coronavirus shutdown in China. Many mills have kept prices unchanged for March shipments to balance supply and demand, while a few are waiting for historical peak season demand in Q2.
The impact of the virus on the Chinese economy is expected to be short-lived, according to the China Iron and Steel Association (CISA). Strong demand is being anticipated in middle to late March. China has announced a nationwide economic stimulus to offset the economic impact of coronavirus.
Major steelmakers in Japan and South Korea have scheduled maintenance and repair activities halting productions. The absence of Chinese steel exports have created a supply shortage that can boost demand for Taiwanese steel in the coming days. CSC remains hopeful of supplying more steel to fill up these voids.
Global growth rate is projected to rise from an estimated 2.9pc in 2019 to 3.3pc in 2020, according to the International Monetary Fund. Price increases by US steel mills, stable domestic steel prices and demand in India and Brazil and Russia have kept the overall outlook for global steel positive for the second quarter of 2020 and beyond.