China Steel : Price Announcement for Domestic Sales in the Second Quarter/April of 2020

On February 21^st, 2020, China Steel Corporation (CSC) held a price meeting for domestic sales in the second quarter(April) of 2020 and announced the following statement:

According to the latest report of IMF, global growth rate is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020(0.4 percentage point increase YOY). Other organizations such as World Bank and UN forecast an improvement in global economy of 2020 as well. The impact of China-U.S. trade dispute was greatly reduced after the first phase of a trade deal reached. And Taiwan industry benefit from order transfer as supply-chain restructuring.

Taiwan government adjust the GDP in the 4^thquarter of 2019 up to 3.31% result from the public infrastructure, green energy industry and massive wave of Taiwan firms back home. Taiwan economic growth is higher than Korea, Singapore and Hong Kong since 2019. Domestic steel downstream industries shall be benefited by the stronger economic growth as well.

The steel demand of second quarter is typically strong. However, to support downstream customers, CSC has reduced price several times before, and the price of 1^stquarter of this year is far below international steel price. Considering the improvement of steel markets and increasing raw material costs, the global major steel mills have started to rise their selling prices in order to overcome the difficulties of heavy losses. US steel mills have increased their selling prices of HR and CR several times. The accumulative increase is up to US$ 190/MT. Steel markets in emerging countries such as Indian, Brazil and Russia tend to stable, and steel prices of these countries have increased US$ 100/MT. European mills start cutting steel production since last year, and the steel prices in Europe are also going up. Vietnam FHS rose their HR price in the 1^stquarter of 2020 totally US$ 50/mt higher than previous quarter. Japanese and Korean mills plan to gradually close and/or maintain their production lines. Therefore, supply of steel is shrinking, and steel prices in near future have great possibility to be increased.

Due to the outbreak of coronavirus disease (COVID-19) in China before Lunar New Year, which forced factories to extend the holiday and disrupted global supply chain, in order to stabilize the market, Chinese steel mills keep the price level unchanged for March shipment, waiting for peak season in 2^ndquarter. Based on the experience from SARS, CISA(China Iron and Steel Association) assess that the impact of disease on economy should be short-term, and transportation and logistics will recover to normal as the disease gradually ease. In addition, as the government roll out economy stimulus measures such as tax reduction, CISA expect there will be strong demand release in middle or late March and the market will rebound soon. Platts also predict the international iron ore and coal prices will rise as Chinese steel mills resume production in March and April (on 17th February, iron ore price rise to US$ 90.1/mt CFR China, metallurgical coal price US$ 156.25/mt FOB Australia), establishing the upward trend in 2^ndquarter. Global economy and steel demand is expected to rebound from the bottom. The reshoring of oversea Taiwanese manufacturers is expected to speed up, creating new opportunities of Taiwan industrial development in the future.

After more than one-year evaluation and preparation, CSC decided to apply monthly and quarterly pricing simultaneously from 2nd quarter of 2020. Pricing for HR(RRQ), HRC, CRC, ES and GI are adjusted monthly in line with global market trend, and moderately applying diversified complementary measures to fortify downstream competitiveness. Pricing for plates, bars and rods, automobile and home appliance steel, etc. are adjusted quarterly to stabilize the industrial development. The new pricing system aims to achieve fairness, risk sharing and to create greatest benefits for customers, employees and shareholders.

In addition, CSC will fully support downstream customers confronted with the disruption of supply chain due to the Chinese coronavirus epidemic, or urgent material demand for transfer orders.

Prices Announcement for Domestic Sales in the Second Quarter/April of 2020
Monthly	Products	Average Adjusted Amounts (NTD/MT)
RRQ	+300
HRC (Including API)	+300
CRC	+500
ES	+600
GI for Structure Steel、Coated Steel	+500
Quarterly	Products	Average Adjusted Amounts (NTD/MT)
Plate (Excluding Ship Building Steel Plate)	+600
Bars and Rods	+500
HRC (Medium Carbon/High Carbon/Tool)	+500
CRC (Drum/ Medium Carbon/High Carbon/Tool)	+500
EG	+300
GI (Home Appliance/Computer/GP)	+500
Automobile Steel, Ship Building Steel Plate	0