The steel market facing the headwind of Beijing: analysts
By Chen Cheng-hui / Journalist
The global steel market faces short-term headwinds due to unfavorable policies from China to control inflation and achieve zero net carbon emissions, Yuanta Securities Investment Consulting Co (元 大 投 顧) said on Friday, Yuanta Securities Investment Consulting Co (元 大 投 顧) in a note.
However, global demand for steel remains robust, thanks to widespread COVID-19 vaccinations relieving the global health crisis and stimulus plans from governments around the world ushering in the post-COVID-19 era, he said. he declares.
Demand for steel from construction companies and auto makers showed no signs of slowing down, Yuanta said, adding that steel supply remains limited due to limited shipping capacity and labor shortages. -work.
In an earlier June 11 memo, a team led by Yuanta analyst Leo Lee (李 侃 奇) wrote, “We expect the dynamics of steel supply and demand to be similar to that seen in the cement industry in the past two or three years. This means tight supply, high demand and low inventory levels. “
“This means a substantial increase in profits for steelmakers,” added the analysts.
China Steel Corp (CSC, 中 鋼), Taiwan’s largest steelmaker, benefited the most, as it reported a pre-tax profit of NT $ 26.9 billion ($ 963.9 million) last week. ) for the first five months of this year, up 848% year-on-year. -year, and earnings per share of NT $ 1.7.
On June 15, CSC said it would not increase the prices of steel products in the domestic market next month, ending 12 months of price increases, but would increase prices by 10% in the third trimester.
Domestic downstream companies have benefited from price increases for CSC’s products, with visibility of orders for some of them extending into the fourth quarter and gross margins remaining at relatively high levels, Yuanta said. Friday.
CSC’s domestic customers are benefiting from the positive dynamics in the global market, as they mainly export products to the EU and the United States, analysts said.
“Based on international steel prices, as well as price increases for iron ore and coking coal, we expect China Steel to raise prices further in the third quarter,” analysts said.
“In addition to the cuts in China’s crude steel production and the cancellation of export tax rebates, we expect steel prices to be supported by improving economic dynamics. global supply and demand over a slower supply of steel, ”they added.
CSC shares fell 0.14% to NT $ 35.75 on Friday in Taipei trading, after rising 44.44% so far this year, according to Taiwan Stock Exchange data.
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