CENS reported that China Steel Corporation (CSC), Taiwan`s largest integrated producer of steel products, recently cut wholesale prices for hot-rolled steel coils to be shipped in July and August by NT$1,800 (NT$60.6 at US$1:NT$29.7) per metric ton.

Downstream manufacturers, including Yieh Phui Enterprise Co. and Sheng Yu Steel Co., said they are very satisfied with CSC`s price-reduction move, saying it will help them make more earnings. Because of the price cut, CSC will see earnings shrink to less than NT$20 billion in 2011 from NT$37.5 billion in 2010, maybe hitting the lowest level since 2008. At present, hot-rolled steel coils account for almost half of CSC`s output and sales.

CSC`s affiliate—Chung Hung Steel Corp. has also slashed wholesale prices for hot-rolled steel coils for shipment in July and August by 7.1%, or a reduction of NT$1,600 per metric ton.

E United Group I.S. Lin said the newly set wholesale prices quoted by CSC has somewhat met those quoted in the international marketplace, which will ease the cost pressure on middle- and down-stream manufacturers. Lin noted he has felt the sincerity of CSC to create a win-win situation with downstream firms.

CSC said steel prices quoted in the international marketplace are on the wane because of the dimmed market demand and the 9% increase in output of crude steel. Particularly, the March 11 massive earthquake in northeastern Japan has forced Japanese steelmakers to boost exports because of reduced domestic demand, leading to decline of steel prices internationally.

Because of the downward adjustment of steel prices internationally, many downstream firms have kept their inventories at a low level.

After scoring outstanding performance in the first quarter of this year with earnings of NT$7.3 billion, CSC posted NT$3.7 billion and NT$3.5 billion in earnings in April and May, respectively. It is expected CSC will see a breakeven in June because of the use of higher-price coal and iron. In total, CSC estimated it`s earnings will range between NT$14.5 billion and NT$15 billion in the first half of this year.