China Steel Corporation Plans to Change Pricing Next Year to Give Taiwanese Firms Leg-Up
2019/05/28 | By CENS | CHINA STEEL MACHINERY CORPORATION
China Steel Corporation (CSC) plans to significantly reform their pricing policy, according to CSC Chairman Wong Chao-tung on May 22.
Wong said the new policy is a response to capricious global economic and political trends, saying that CSC prices should be timelier and allow enough flexibility to quickly meet market changes.
Set to come into effect next year, CSC plans to announce steel pricing by monthly or by a “2+1” system, which sets a price for two months and another price for one month, for example, a price for January and February, and another price announced for March. Both plans are meant to replace the present quarterly pricing plan, as means to remain flexible enough to cover the varied circumstances in different markets, such as domestic and export sales and more.
Wong added it would allow clients to gradually adapt on its own and assist the client’s pricing strategies in response to market demands as well.
CSC maintains a dominant position in the domestic steel industry, especially with its diverse downstream industry suppliers, including galvanized steel, slitting industries, automobile, naval engineering fasteners, steel wires, steel structure, hand tool and more. The changes to CSC’s pricing strategy will definitely play a pivotal role in the industry, Wong said.
To elaborate why the pricing change is relevant, Wong pointed out that CSC is expected to announce the third quarter’s price at the end of May, however, Chinese competitors such as Baoshan Iron & Steel and Wuhan Iron and Steel group Corporation have just recently announced their decision to set pricing in June.
The next time CSC is expected to reveal the price is in July, which Wong says obviously puts Taiwan at a disadvantage. He also mentioned, due to the fierce trade tensions, a turbulent market and the U.S.’s unpredictable high tariff policy, highlights the importance of prompt pricing response.
A CSC executive said the circumstances between domestic sales and export sales are largely different and yet CSC adopts a make-to-order strategy over all of its orders. A final decision about the way how to practice monthly price or “2+1 system” will be addressed after fully discussing with all the clients. In addition, the executive said they plan to hear out clients and make appropriate adjustments.
CSC plans to implement the new pricing system primarily on export-oriented products. Starting next year, CSC will announce the price in January and February, another price in March and the other price in April and May and so forth. Case in point: rolling mill and fasteners orders make up a higher percentage of exports, therefore CSC considers these two fields to be applicable to the “2+1 system.” CSC hopes by making the changes, their pricing strategy will reflect their ability to quickly respond to market changes.