Taiwan CSC May Reduce Steel Production by 7-10% in Q4 Due to Low Steel Demand

With only a meteoric rebound in the market, the global steel price once again suffered its own cold winter. On August 26, Taiwan CSC set a declining trend for the prices in Oct. and Nov., which have been on a decline for the 5th consecutive year. In addition, owing to the low demand from its customers, in Q4 CSC will reduce the steel production by 7-10% (the first time ever since 2000).

Analysts pointed out that the steel price slumped in 2008 due to the financial storm but returned to the normal level quickly within 5-6 months. However, the current steel market seems to be still with very low demand, whether the market will turn well or not needs more observation. On August 21, the stock price of CSC closed at NTD18.85 (-0.45).

Other analysts said that the real problem is both domestic and overseas demands are too low. On the other hand, the order acceptance from overseas markets is insufficient and the domestic sales are also low. Many customers of CSC have expressed that they would like to reduce the demand by 6-8%. The monthly production of 6 sets of CSC’s furnaces has been nearly fully utilized for so long, however, considering the current low demand, it may reduce the production by 7-10% in Oct.

On the other hand, as the order acceptance of the fastener industry using wire rods as manufacturing materials seems not to be in a very high level currently, it is even heard that at least 15-20 fastener processing plants located in Gangshan (Kaohsiung, Taiwan) have been closed this year. Hand tools were once one of the bestsellers of Taiwan’s export, its recent sales have shown a significant decline. Steel wires & cables industries find it hard to search for new orders, so their demand for wire rods quickly becomes weak.