A move by China Steel Corp., one of the leading steel makers in Taiwan, to cut its domestic wholesale product prices for December delivery showed caution about demand in the fourth quarter, market analysts said Saturday.
The price cut by China Steel followed an earlier decision made by Baosteel Group Corp., a Chinese steel giant, to lower its product prices for November contracts amid uncertainty over the global economy at a time when both economic and non-economic factors, such as geopolitical unease, have impacted market sentiment, they said.
In a pricing meeting held a day earlier, China Steel decided to cut its domestic wholesale prices for December delivery by 3.27 percent, or NT$646 (US$21.25), per metric ton on average from October-November contracts.
It was the first time China Steel lowered its domestic wholesale prices after it left prices for contracts for September-November unchanged.
China Steel said the global economic recovery has shown signs of slowing, which has reduced peak season effects normally seen in the fourth quarter in the global steel industry.
The industry has felt the impact as their inventories rise amid weakening buying interest.
Last week, the International Monetary Fund downgraded its forecast for global economic growth in 2014 by 0.1 percentage points to 3.3 percent and cut its estimate for growth in 2015 by 0.2 percentage points to 3.8 percent.
At the same time, market analysts said that a supply glut in China, one of the largest steel consumption countries, has sent product prices lower and imposed further adversary impact on the global steel business.
As a result, China Steel has decided to cut its domestic wholesale prices for steel plates by NT$861 per metric ton for December contracts, and prices of cold-rolled steel by NT$829 per metric ton.
The steel maker has also decided to cut domestic wholesale prices of hot-rolled steel, steel wire rod, electro-galvanized steel, electrical steel coil and hot-dipped zinc-galvanized steel by NT$600 per metric ton.
However, China Steel remained confident that global steel demand will soon pick up as China is gearing up to push for infrastructure projects to boost its economy, saying that steel product prices should find some support to prevent a downtrend from getting much worse.
China Steel also cited an estimate made by the World Steel Association as saying that global steel demand for 2015 will grow by 2 percent from a year earlier to 1.593 billion tons.
Source: Focus Taiwan
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