The Taipei Times reported that affected by cuts in steel production in China, Taiwan''s steel prices are likely to rebound after hitting bottom in the second quarter of 2010.
According to Taiwanese steel makers, steel production by China may decrease by 10% in September 2010 because China began restricting power supply to mills this month to meet its energy efficiency targets. The Chinese government is currently seeking to reduce energy consumption per unit of GDP by 20%, from 2006 to this year.
Taiwanese steel producers said that with reductions in China''s steel production expected to step up between next month and December, Chinese steel prices will continue to rise until the end of this year, and that will boost steel prices in Asian markets, including Taiwan''s.
An official from a local downstream steel firm, who declined to be named, said that "The rise of Chinese steel prices will also reduce the possibility of the dumping of Chinese steel products in Taiwan, and that will help stabilize, or even boost Taiwan''s steel prices."
He said that the prices of hot rolled and cold rolled steel from Taiwan’s Chung Hung Steel Corporation, which relies on imports of steel billets for manufacturing steel products, are expected to show the first sign of local steel price movements.
He added that "As Chung Hung''s hot rolled steel prices were reported at USD 625 in September 2010 about USD 12.6 lower than the market price, the company may raise its steel prices by USD 9.5 to USD 15.8 in October."
If Chung Hung raises its steel prices, other middle stream and downstream steel firms will likely follow suit, and pull up local steel prices.
Asian steel prices have fallen since the second quarter of this year, because Chinese authorities have started to take stringent measures to control its real estate markets for fear of a bubble developing. That has also dampened demand in steel markets.