Taipei, July 21, 2011 (CENS)--China Steel Corporation (CSC), Taiwan`s largest integrated producer of steel products, recently cut wholesale prices to local buyers, excluding wire rods and hot-dip galvanized steel coils, to be shipped in September, deciding to cut such prices by 1.69% on average or NT$422 per metric ton.

The price reduction will, predicts institutional investors, shrink the firm`s pretax earnings to between NT$4 billion and NT$5 billion in the third quarter, half that of the previous quarter.

However downstream specialized steel-rolling firms in Taiwan, including Yieh Phui Enterprise Co., Sheng Yu Steel Co. and Kao Hsing Chang Iron & Steel Corp., won`t see substantial growth in earnings due to higher production costs, coupled with CSC`s refusal to cut prices of hot-rolled steel coils, the raw material for these downstream makers.

CSC said price cutting is limited due to still high coal and iron costs internationally, with price reductions to help downstream firms vie for orders and spur buying in the market.

CSC said it loses over US$30 per metric ton to produce hot-rolled steel coils, which are quoted US$720 per metric ton ex-factory based on the present exchange rate of around NT$28.9 to US$1, despite production costs of between US$750 and US$760 per metric ton.

Source:cens