China Steel will reduce exports to meet domestic demand

China Steel will reduce exports to meet domestic demand

Taiwan's major steel maker China Steel Corporation (CSC) is set to increase its production for the local steel industry in order to cover the supply shortage experienced in Taiwan. The Ministry of Economic Affairs, i.e. the government, owns the 40% stake of the steel maker, which currently controls 57% of the hot rolled stainless steel coil market and 44% of the cold rolled stainless coil market. The local distributors and retailers have filed their request to the Ministry of Economic Affairs that CSC to increase its production to supply the domestic industry. They also ask CSC to cut the domestic prices by 30%. In consequence of such request CSC will now cut down its exports by 10-15% and also increase production to meet the domestic demand starting from beginning of Q2. However, the company will not reduce any prices as it believes such action might confuse the markets. The supply shortage in Taiwan is also deriving from the local steel makers turning to CSC with the influence of the sharply increasing prices in the international steel market. With such 10-15% reduction of exports, CSC will be in a position to allocate some 250-300'000 mts of hot rolled stainless steel coil and cold rolled stainless steel coil to meet the local demand coming from construction and machinery industries. The Ministry of Economic Affairs will now investigate whether the local distributors are stockpiling any material and if that is the case CSC will immediately cut down domestic supply as such stockpiling could also be a reason to cause shortage.