Taipei, May 14, 2008 (CENS)--Thanks to a hike on its product prices, China Steel Corporation (CSC), Taiwan`s largest integrated producer of steel products, will see a 30% quarterly increase in earnings in the second quarter of this year.

Due to the launch of an annual machinery repair and maintenance work, CSC saw sales drop slightly in April from March. The company said it won`t be subject to the hiked contract prices in procurement of raw materials until June.

The company said it had to offer a higher price to procure spot raw material in the first quarter of this year than in the first quarter, leading to a drop in gross profit margin. CSC saw monthly gross operating margin slip to 22.52% in the first quarter of this year from 23.4% in the fourth quarter of last year.

As CSC has raised the selling prices of its products slated for delivery in the second quarter, an industry insider believed the steel maker will see substantial growth in earnings in the second quarter.

Based on the projected quarterly shipments of between 2.5 million and 2.7 million metric tons of steel products, CSC is expected to see second-quarter sales hit a historic high of over NT$65 billion (US$2.11 billion at uS$1:NT$30.8). The company`s quarterly pretax earnings will challenge NT$18 billion (US$584.41 million), or NT$1.5 (US$0.048) per share, in the second quarter.

CSC said it registered NT$20.427 billion (US$663.21 million) in sales for April, representing a decrease of NT$20 million (US$649,350) from March but still up 24.74% year-on-year. The company scored NT$77.78 billion (US$2.52 billion) in cumulative sales in the first four months of this year, up 18.74% year-on-year.

The company saw average selling price (ASP) increased to NT$24,400 (US$792.2) per metric ton in March, up 7% from the previous month`s NT$22,800 (US$740.25). Thanks to a 20% hike in product prices in the second quarter, the company is expected to see a continued growth in ASP in both May and June.
(by Ben Shen)