CSC’s move came after Chinese rival Baosteel Group Corp (寶鋼) last month said that it planned to slash crude steel output by 20 percent as most mills swung into the red last quarter following a series of overcapacity-driven price cuts.
“Global economic weakness and falling steel demand domestically and internationally has led the company to adopt a policy adjusting production to cope with shrinking orders,” CSC spokesman Wang Shyi-chin (王錫欽) said in a statement to the Taiwan Stock Exchange.
The statement came after the Chinese-language newspaper Economic Daily News yesterday reported that the company plans to trim production by 8 percent in the current quarter and step up reductions to 10 percent next quarter.
CSC did not disclose the percentage of production it plans to cut.
“The company will produce as much [steel] as customers order,” Wang said.
CSC targets shipment of 2.8 million tonnes of steel in the current quarter, 8 percent less than an average monthly shipment of 3.1 million tonnes, the report said.
Due to the Lunar New Year holiday, which falls in February next year, CSC expects to see shipments decline by 10 percent next quarter as demand slows, it said.
The company’s stock price yesterday fell by 0.8 percent to NT$18.7, the lowest since Aug. 24, while the TAIEX rose 0.24 percent.
The firm reported operating losses of NT$6 million (US$183,050) last month, versus operating income of NT$164 million in September.
The company, based in Kaohsiung’s Siaogang District (小港), last week reported its first monthly operating losses in about three-and-a-half years for last month, blaming oversupply and declining prices.
The steel industry’s downturn has spread to smaller companies. Chien Shing Stainless Steel Co Ltd (千興不鏽鋼), a 20-year-old firm, announced it was shutting down its factory for a month starting on Nov. 11 to minimize operating losses. Employees are required to take unpaid leave.
However, the company said operations remain steady as it continues shipping products to customers from its storage, and paying employee salaries and bank loan rates.
