Report by Wang Shang-Yi

Taiwan CSC (China Steel Corporation) has announced a price reduction of NT$2,000 per ton for its wire rods in the third quarter. While wire rod users find the NT$2,000 reduction expected, they believe that considering the current low international market prices, CSC could offer a larger discount. The “Pricing Transformation” project by CSC is expected to be released by the end of the month, and its success will depend on the results of the initial round of orders.

CSC stated that the quarterly pricing reflects the market changes over the past three months, taking into account the differences in opening times and downstream industry structures for the quarterly products. It is anticipated that steel prices will hit bottom and rebound in July, and demand will reverse from its trough and move towards recovery. CSC hopes that downstream industries will take advantage of the low steel prices to replenish their inventories and prepare for future orders, welcoming a positive outlook for the steel market.

Screw manufacturers believe that the NT$2,000 reduction in wire rod prices by CSC is neither too much nor too little, but they feel that there is a slight lack of sincerity. Currently, there is still a gap between the international wire rod market prices and CSC’s prices. If CSC can offer more subsidies through projects and discounts to downstream industries, it would make the deal more appealing.

The industry states that they will report the new screw prices to their customers in the coming days. In theory, Taiwanese manufacturers will reduce their prices in accordance with CSC’s price drop. They will gradually inform their customers of the price reductions and observe their reactions. Customer inventories have been depleted for a while, so the third quarter may see improved screw orders.

While CSC customers unanimously believe that CSC will introduce the “Pricing Transformation” project, the release of the project in the third quarter depends on the results of the initial round of orders. It is currently uncertain whether the project will be implemented. The project aims to reduce downstream procurement costs, and if the first round of orders for CSC is not ideal, introducing the project as a stimulus for orders would be a viable option.

Coverpicture by CSC