China Steel to Raise Domestic Product Prices 3.9%

By [bn:PRSN=1] Yu-huay Sun []

Aug. 28 (Bloomberg) -- China Steel Corp., Taiwan's largest steelmaker, will raise domestic prices by an average 3.9 percent in the fourth quarter, the smallest gain this year as demand slows in the auto and construction industries.

Prices of hot-rolled coil, a benchmark product, will rise by an average NT$800 ($25) a metric ton, the Kaohsiung-based company said in an e-mailed statement today.

Output by Taiwan's automobile and auto-part makers plunged 24 percent in July, while the construction industry dropped 27 percent. Steel demand in South Korea and China may be slowing, Citigroup Inc. and Goldman Sachs Group Inc. said this week.

``Customers' inventories were a bit higher than past years,'' Angela Chuang, an analyst at Capital Securities Corp. with a ``neutral'' rating on the stock, said in Taipei. ``The price rise is in line with expectations.''

China Steel fell 2.3 percent to NT$38.6 in Taipei before the statement. The stock has fallen 8.6 percent this year, compared with the 17 percent drop on the benchmark Taiex Index.

The increase in the October-December prices will be the 11th straight quarter of gains for China Steel. The company yesterday reported a 16 percent rise in second-quarter profit as it benefited from shipbuilders demand. The company had said it won't cut prices in the fourth quarter as demand is holding up.

Baoshan Iron & Steel Co., China's biggest steelmaker, this week cut cold-rolled product prices by 4.6 percent, the first reduction this year, amid concern demand from carmakers will slow.

Hot-rolled steel is used to make cold-rolled steel, which is used with zinc-galvanized sheets in car bodies and appliances.

China Steel will boost prices of steel plates by an average NT$1,700 a ton, bar and wire rods by NT$1,800 a ton and cold- rolled steel by NT$990, according to the statement.

The company will increase the prices of electrical sheets by NT$1,500 a ton, and of hot-dipped zinc-galvanized sheets by NT$240. Those of electro-galvanized sheets will remain unchanged.

To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net