China Steel Corp (CSC, 中鋼) said yesterday its board approved a plan to invest in a coal mine in Australia as the company seeks to secure supplies of raw materials to meet growing demand at home and abroad.
The nation’s biggest steelmaker also announced that it would raise domestic steel prices for April and May contracts amid a recovering market, marking its first hike this year.
The Taiwanese company will pay Australian miner MCG Group A$102 million (US$95.58 million) for a 10 percent stake in MDL162, a coal mine in Queensland’s Bowen Basin, which will provide CSC with up to 600,000 tonnes of metallurgical coal a year, according to a company statement.
Of the A$102 million, A$50 million will be used to acquire the 10 percent stake in MDL162, with the remaining A$52 million to be used as working capital for future plant construction and further exploration of the mine, the statement said.
CSC’s investment plan came as worries about the eurozone debt crisis temporarily subsided yesterday following another eurozone bailout for Greece and in view of a potential global economic recovery that would likely stimulate global demand for raw materials.
The company said steel mills worldwide have raised prices recently, with most Chinese steelmakers hiking prices for next month’s contracts, while export prices of steel products from Japan and South Korea continue to rise.
“[The] global steel market has shown signs of bottoming out,” CSC said in a separate statement. “[Taiwan’s] downstream industries have resumed taking new orders from both local and overseas clients because of an improving international political/economic environment and rising global steel prices.”
The Greater Kaohsiung-based firm said it would increase steel prices for April and May deliveries for its domestic downstream customers by an average of NT$270 a tonne, or 1.11 percent, from next month’s levels, with hot-rolled coil, a benchmark product, rising by NT$452 per tonne.
So far this year, CSC has cut domestic prices on steel products for delivery last month and this month by an average of NT$1,756 a tonne, or 7.08 percent, but kept prices unchanged for next month’s contracts.
Prior to the announcement yesterday, the company was forecast to hike prices by 3 percent for April and May contracts, Credit Suisse analysts led by Sidney Yeh (葉昌明) said in a note issued on Thursday, citing improved demand from customers’ restocking and mild price increases by its regional peers.
While the prices of major steel products have rebounded after the Lunar New Year holiday, CSC said downstream industries remain vulnerable to global economic uncertainties and a rising New Taiwan dollar.
Under the latest pricing adjustments, CSC will raise prices for steel plates used in construction by NT$32 a tonne for April and May shipments. The company will also increase the price of cold-rolled sheets and coils, which are used in the automotive industry, by NT$350 a tonne.
It will add NT$500 to the cost of electro-galvanized sheets, NT$246 to electrical sheets and NT$500 to the price of hot-dipped zinc-galvanized sheets.
CSC’s share price was unchanged yesterday, closing at NT$30.25 on the Taiwan Stock Exchange. The stock has risen 5.03 percent since the beginning of the year, underperforming the benchmark TAIEX’s 12.01 percent rise.