That would help CSC end months-long pre-tax losses since October last year. The company posted its fourth consecutive monthly pre-tax loss in January, as unprecedented oversupply and sluggish demand have driven prices down since the second half of last year.
China trimmed crude steel output by 7.8 percent year-on-year in January, which helped reduce worldwide output by 7.1 percent, CSC chairman Andrew Sung (宋志育) told a news conference yesterday, citing World Steel Association statistics.
“China’s efforts to cut overcapacity have been positively received globally,” Sung said. “If such capacity adjustments persist for the whole year, we anticipate that the steel industry will continue its upward trend throughout the year.”
The Kaohsiung-based company last week raised domestic steel prices by an average of 3.1 percent for all products to be delivered next month and in May.
The reduced supply glut also helped shrink the company’s pre-tax losses to NT$318 million (US$9.51 million) in January from NT$1.98 billion in pre-tax losses in December last year.
However, Sung expects the company’s revenue this year to be lower than last year’s NT$285.08 billion due to a mild price increase.
“We feel a significant recovery in the first and second quarters, which are peak seasons for certain industries. Customers are rebuilding inventory to cope with a rebound in demand,” executive vice president Wang Shyi-chin (王錫欽) said.
“Demand for certain steel products exceeds what we can supply,” Wang said.
Wang said he would not rule out the possibility of returning to profitability in the second quarter in light of the recent revival.
The equipment loading rate recently reached 100 percent, from about 85 percent, on average last quarter, the company said.
Shipments next quarter are expected to grow at least 3 percent sequentially to about 335,000 tonnes, compared with 320,000 tonnes this quarter, CSC said.
“Prices are also picking up gradually, but visibility for the third quarter is still vague, as the industry becomes volatile,” CSC vice president Liu Jih-gang (劉季剛) said.
In addition to the improvement in its core business, CSC also saw its new Vietnamese subsidiary become profitable in December, Sung said.
CSC holds an about 25 percent stake in a steelmaking join venture, Formosa Ha Tinh Steel Corp (台塑河靜鋼廠), in Vietnam with Formosa Group (台塑集團) .
The price of CSC shares remained unchanged at NT$20.6 yesterday, with a turnover of 32.5 million shares.
The steelmaker last week was the darling of foreign investors, who bought a net 45.44 million shares of CSC, according to Taiwan Stock Exchange Corp statistics released yesterday.
