News Room - Steel Industry

Posted on 03 Mar 2010

China Steel Says Global Steel Market Returns to Healthy Levels

China Steel Corp., Taiwan’s biggest producer, said the market has returned to the levels before the global financial crisis, paving the way for price increases.

 

“Supply and demand is quite healthy,” Executive Vice President Chung Le-min said in a telephone interview today from Kaohsiung, where China Steel is based. “The market is much better than a year ago, when it was at its worst.”

 

The economic recession slashed steel demand last year, leading to losses for most producers and causing prices in the U.S. to drop to a five-year low in June. Benchmark steel prices in China may rise by about 10 percent as demand improves and raw material costs rises, Credit Suisse Group said Feb. 23.

 

Steel prices will probably climb higher because mills need to cover costs, Chung said. China Steel last month announced a 2.9 percent price increase for April, raising charges for domestic customers for the second time this year.

 

China Steel rose 0.3 percent to close at NT$32.90 in Taipei trading.

 

Benchmark iron ore prices may jump 60 percent this year on strong Asian demand and as BHP Billiton Ltd. pushes steelmakers to accept pricing pegged to higher spot levels, Morgan Stanley analysts said today. Benchmark contracts were settled at about $61 a ton last year.

 

Rapid Increases

 

Contract prices of iron ore and coal, used in steelmaking, may rise by more than 40 percent this year, China Steel said Feb. 24. The company hasn’t reached agreements with suppliers, Chung said today. “The miners are still trying to boost prices,” he said.

 

Chinese steelmakers may push through “rapid” price increases in the next two to three months because of rising costs, Macquarie Group Ltd. said last week. Benchmark prices in China may rise by about 10 percent from about $490 a metric ton, Credit Suisse had forecast.

 

Operations at a furnace owned by a China Steel subsidiary “are proceeding as expected” after being commissioned Feb. 26, Chung said. The Dragon Steel Corp. plant, with an annual 2.5 million ton capacity, may take more than a month to reach full capacity, he said.

 

With Dragon Steel, China Steel has five furnaces with a combined capacity of 12.5 million tons a year.