China Steel : Price Announcement for Domestic Sales of Fourth Quarter/October shipment of 2023

September 14th, 2023, China Steel Corporation (CSC) hereby announces following statement, regarding the forecast and sales price adjustment for the fourth-quarter/ October shipment of 2023.

The central bank of Europe Union countries and that of the United States raised interest rates and reduced asset purchases to curb inflation, resulting in higher financing costs and lower corporate investment. However, as the end of Fed rate hike cycle nears, economic outlook is gradually improving. According to the August forecast by The Economist Intelligence Unit (EIU), global GDP growth for 2023 has been revised up by 0.1% to 2.3% since July. The United States sees mild economic expansion, while Europe and Japan remain stable. Taiwan's economy remains challenging, but the government's stimulus measures targeting domestic demand help alleviate export declines. These measures include extended tax reductions on commodities and energy, expanded tax refunds for energy-efficient appliances, and stabilize the housing market to ensure price stability and boost consumer confidence. The Directorate-General of Budget, Accounting, and Statistics, Executive Yuan forecasts Taiwan's economic growth rate in the fourth quarter of this year to reach 5.59%, and for the year 2024 to exceed this year's rate (1.61%) at 3.32%.

Global steel demand hits bottom in late June this year and begins to recover, yet, in August, China experienced a major crisis in the real estate sector, prompting a series of measures by Chinese authorities to stimulate the weak property market. Rebuilding demand surfaces in China after flooding, with new special bond projects sought to be issued to strengthen the infrastructure developments. In August, the manufacturing PMI index in the United States showed signs of improvement. Specifically, the production index returned to expansion mode. It is anticipated that once inventory adjustments are completed, there will be an increase in demand to replenish stock, further driving an upward reversal in steel prices. The fourth quarter marks the year-end holiday season for European and American markets; the shortage of semiconductor chips eases, resulting in record high automobile production. According to MarkLines, global automobile production in the first seven months of this year hit 50.03 million vehicles, marking a 10% YoY increase. Taiwan's automobile market shows vibrant demand, with stable sales growth. As of August, accumulated sales (excluding heavy vehicles) have reached 313,000 vehicles, representing a 13.4% year-on-year increase, boosting steel demand for automobiles.

Regarding steel supply, worldsteel statistics show that global crude steel production stood at approximately 1.1 billion tons from January to July this year, marking a 0.1% year-on-year decrease. Notably, the EU, North America and Japan experienced reductions of 10.3%, 3.5% and 3.9% respectively, indicating supply tightening. In August, China's Ministry of Industry and Information Technology, in collaboration with the National Development and Reform Commission, released a steady growth plan for the steel industry, promoting policies for controlling crude steel production, encouraging mergers and restructuring in the steel sector, and setting production restrictions for local steel mills in major steel-producing provinces such as Hebei, Shanxi and Hunan. To achieve the 1.018 billion ton control target by October 2022, daily crude steel production in China must decrease by 17% from August to 2.457 million tons per day from September onward, signifying an expected gradual reduction in output. Additionally, observing steel inventory levels, social steel inventories in China fell to 118.2 million tons in early September, marking a new low this year, and Japan's inventory of thin plates in July was only 3.93 million tons, a new low since July 2021.

Recently, the iron ore price dramatically surged to US$ 122/dmt(+28% MoM) from a relative low point of US$ 95 in mid-August, a new high since May 2023. Coking coal price has soared from US$ 220~230/mt, a low point in July, to US$ 312/mt(+39% MoM) so far. High steel making cost provides a strong support to steel pirces. European mills are planning to increase EUR 50(about US$ 54) per ton on flat products after summer vacation. POSCO in South Korea is planning to rise KRW 50,000/mt(around US$ 38/mt) on the prices of local flat products for October shipment. Chinese HR prices had rebounded to nearly RMB 4,000/mt(+13.3%) from the bottom of RMB 3,532/mt in May. Baosteel, Ansteel and Benxi have also determined to increase RMB 50~100(around US$ 7~14) per ton on the offers of domestic flat products for October shipment and remove some discounts which makes the actual price increase even higher. The uptrend in global steel prices is obvious.

EU CBAM will be applied since October 2023 with a transition period and is projected to fully launch at the beginning of 2027. In this August, Taiwan Government has restructured the Environmental Protection Administration(EPA) into the Ministry of Environment, and also established Taiwan Carbon Solution Exchange(TCX). It is planned to levy carbon fees starting from 2025. CSC complies with Taiwan Government's policy to build up a carbon management consultant team in our existing industrial service group. Our participation in the Bureau of Industry's "1+N Carbon Management Demonstration Team" is aimed to assist downstream companies in strengthening their carbon management capabilities. In the new era of industrial decarbunization and high steel price, our missing is to enhance the competitiveness of Taiwanese steel industry in energy saving, carbon reduction and eco-friendly production, and lead the industry from a 'qualitative change' to further transform into a 'value-added change' for creating green business opportunities and shared value.

Since the second half of last year, the steel industry have experienced a cyclical headwind. Manufacturing industry nowadays has entered the final stage of destocking. Asian currencies have depreciated against the USD, and the New Taiwan Dollar has also dropped more than 4% in the past three months. The rising productiion costs has forced Asian steel mills to push up their steel prices accordingly in the fourth quarter. An upward steel market trend is showing. CSC takes mild, appropriate and stable price adjustment strategy to increase the domestic price of October shipment in order to reflect the higher material costs and the uptrend of international steel price reasonably reasonably reasonably reasonably reasonably. The pricing assessment of the fourth quarter shipment is based on the different industrial conditions of downstream customers and adjusted moderately according to quarterly cycle. For certain downstream industries under difficult circumstances, the multiple solutions will be offered based on industry.

CSC hereby announces the prices adjustments of domestic steel sales for the fourth-quarter and October shipments of 2023 are listed below：

Offer Basis	Products	Adjusted Amounts (NTD/MT)
October shipment	HR Plate	+500
HR	+500
CR	+500
EG	+500
GI (Constructing)	+500
GI (Appliances)	+500
ES	+500
Fourth-quarter shipment	Plate	+1,200
HR Plate	+0
Bar and wire rod	+1,000
HR (Medium-High Carbon, Tooling)	+0
CR (Medium-High Carbon, Tooling)	+0
CR (Drum)	+1,000
Automotive usage	+500