TAIPEI, Taiwan - Taiwan's largest steel producer in terms of revenue, China Steel Corp., said on Friday it will keep domestic product prices unchanged for December as a result of sluggish demand.
China Steel yesterday said in a statement that demand has not recovered completely after China's National Day holidays in early October, and inventories increased slightly. For the fourth quarter, demand in the global steel market remains to be seen.
The company raised prices for the October-November period by an average of 1.86 per cent compared with September because of higher iron-ore costs.
The decision to hold the line on December prices was in line with analysts' expectations. China Steel followed its Chinese counterparts, like China's largest listed steelmaker Baoshan Iron & Steel Co., which on Oct. 10 said it would keep prices unchanged for November.
"Although the fourth quarter is traditionally peak season, there is limited room for the company to raise prices due to excessive supplies from China," said an analyst.
But Masterlink Securities analyst Charles Ko said demand will still likely pick up in the near term as Chinese local governments are expected to speed up their investments in public infrastructures to meet their budget targets and further boost economic growth.
China Steel yesterday closed up 0.19 per cent at NT$26 (S$1.09) while Taiwan's weighted index closed up 66.51 points, or 0.79 per cent, at the day's high of 8,441.19.
China Steel sells about 75 per cent of its output domestically and exports most of the rest to China and Japan.
Malaysia Plant to Begin Production in 2015
In other news, China Steel said it expects to source 30 per cent of its annual raw material needs with a new alloy plant in Malaysia.
According to the Central News Agency, a total of US$328 million (S$406 million) will be injected into the plant, a joint venture with South Africa's Assmang Ltd. and Japan's Sumitomo Corp. The three firms signed a deal on the plant Oct. 10 in Malaysia.
Assmang owns a 54.36-per cent stake in the plant, while Sumitomo owns 26.62 per cent and China Steel 19 per cent.
The 113-hectare plant will be located in the Samalaju industrial park, which is still under development about 60 kilometers north of Bintulu in the state of Sarawak.
The plant, which is scheduled to begin production in 2015, will supply 30,000 metric tons of raw materials to China Steel every year, according to the company.
China Steel Sumikin Vietnam Joint Stock Company (CSVC), China Steel's Vietnam subsidiary cold rolling complex, was recently completed and is scheduled to break even in three years.