On December 11th, 2020, China Steel Corporation (CSC) held a price meeting for domestic sales in the first quarter (January) of 2021 and announced the following statement:
Due to the successful development of COVID-19 vaccine, and nearing to the conclusion of US president election and the new economic relief package launched by each countries' government, the global economy has been on track gradually. OECD forecasts the global economic growth rate will be 4.2% in 2021. The Directorate General of Budget, Accounting and Statistics (DGBAS) also optimistically predicts that the economic growth rate of 2021 will reach 3.83% in Chinese Taiwan, which is benefiting from the release of infrastructure, the trend of returning Taiwanese companies and the rising export market.
Meanwhile, global car sales were up by 2.3% in October and the US new residential sales were at a seasonally adjusted annual rate of 990,900 units in October, up by 41.5% y-o-y. Thanks to the rising demand from automobile and construction industries, Taiwan export value reaches US$51.6 billion in October, hitting a record high.
Due to sharp demand drop brought by Covid-19 pandemic, most of the steel mills have put their steelmaking facilities under maintenance since March, which causes the production volume to have plummeted in recent months. Moreover, the logistical disruptions caused by floods and the winter steel production restriction plans in China have made the steel supply facing a substantial contraction. However, the demand of downstream industries has recovered faster than expected, and the inventory level has fallen rapidly. The overall steel demand has shown a V-shaped recovery in the fourth quarter. The supply is far from matching the demand.
Positive market sentiment also supports steel prices, given the iron ore prices soaring to US$158/ton and reaching a new high within 7 years. Also, the coking coal prices remain high, which push up the steel price sharply. US HR price is reaching US$1,000/ton, and European HR price is around US$700/ton. Compared with Southeast Asia and Taiwan market, the current import price is around CFR US$650/ton only, which means that there is still some room for the price to hike in Asian market. Boasteel raised domestic hot-rolled(HR) and wire rod prices by 400 CNY (US$61) for January shipment, and other steel products were raised by 500~800 CNY (US$77~123). It is expected that FHS may also raise price significantly to reflect soaring steelmaking cost and market price.
As global steel prices keep rising and iron ore price reaches new high, considering the appreciation level of NTD against other currencies, and downstream customers' competitiveness, CSC decides to steadily adjust the prices. The listed prices are lifted by 6.1% in average (NTD 1,200~1,500/MT).
Source: Market Screener