China Steel Corp, Taiwan's largest maker of the metal, is to cut prices by an average 23 percent for domestic customers, its first cut in almost three years, after a reduction in demand.

Prices of hot-rolled coil, a benchmark product, will drop by an average NT$7,840 (US$236) a metric ton, the company said yesterday. The reduction will last between January and March, according to spokesman Chung Le-min.

China Steel joins Baoshan Iron & Steel Co in reducing prices as the economic slowdown hurts demand from car makers and builders, Bloomberg News said.

"Demand for steel will probably continue to fall since Taiwan's economy is in a recession and the property market is cooling," said Eric Yao of Truswell Securities Investment Trust Co in Taipei.

China Steel, based in Kaohsiung, said yesterday that it planned to cut output by 10 percent next year.

The mill last cut prices in the second quarter of 2006.

The company will lower prices of steel plates by an average NT$4,550 a ton, bar and wire rods by NT$7,000 and cold-rolled steel by NT$7,510, according to its statement. It is also dropping the price of electro-galvanized sheets by NT$8,000 a ton, of electrical sheets by NT$8,000, and of hot-dipped zinc-galvanized sheets by NT$7,680.

Hot-rolled steel is used to make cold-rolled steel, which is used with zinc-galvanized sheets in car bodies and appliances.

China Steel fell 2.5 percent to close at NT$21.50 in Taipei trading before the announcement.

The stock has fallen 49 percent this year, compared with the 50 percent drop in the benchmark Taiex index.

Baoshan Iron & Steel, China's biggest steel maker, has reduced prices for three straight months.

The company lowered cold-rolled product prices for December by 22 percent, the biggest cut this year.

(Shanghai Daily November 27, 2008)