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After China Steel Corp's (CSC) domestic steel price rebounded mildly in December 2016, CSC has announced the domestic price for Q1 of 2017. As expected the price goes on a drastic rise to an average increase of NTD2,265 per ton, an increase margin of up to 12.6%.

According to CSC, the company is facing pressure of substantial price raise on steel as domestic steel distribution price and export price rise. Considering the competence of domestic downstream steel industry, CSC decides to raise the price for Q1 2017 for 7 major steel products. Among them, hot-rolled steel price rises by NTD2,265 per ton, wire rods rise by NTD2,400 and cold-rolled steel rises by NTD2,495.

From the material aspect, the short global supply of coal is going worse. Coking coal FOB price rose from USD100 per ton to USD305 since July 2016, and the expected price for the next quarter will breach USD 280. Iron ore price rose from USD50 to USD75. Accordingly the steel production cost in the first quarter of 2017 will drastically rise by USD150 to USD 200 from the third quarter of 2016.

Due to the rise in material price, global major steel makers announce price raise one after another. US steel plants made 3 consecutive price raises for steel plates since October 2016. The 3 major steel makers in China raised domestic hot rolled steel price for December by RMB300 to RMB450, and the accumulated price increase from October is already as high as RMB840. Major plants in Japan and South Korea have raised their steel CFR export price for January 2017 to between USD510 and USD530 per ton with an increase margin exceeding USD100 per ton. Internationally, IMF predicts the global GDP growth will reach 3.4% in 2017, better than 2016.

Wire rod cost is estimated to rise 10%, equal to around 5% increase in fastener cost.

China Steel Corp’s Domestic Steel Price Adjustment for Q1 2017: