China Steel (2002) Investor presentation summary

Steel and raw material dynamics

• Middle East conflict disrupted Eurasian steel supply, enabling expansion into Southeast Asia and North America, with minimal impact on Middle East sales due to diversification of export markets.

• US steel demand is supported by infrastructure and energy projects, while EU faces reduced import quotas and stable inventories; ASEAN sees price increases due to higher shipping costs.

• China’s steel PMI remains below the boom-bust line, but supportive policies and infrastructure investment are expected to drive gradual recovery; Taiwan’s demand is stable, led by commercial and technology projects.

• Coking coal prices rose due to Australian weather disruptions but stabilized as supply recovered; iron ore prices increased early in 2026 but declined with seasonal demand drops.

• Global steel market fundamentals are stable, with positive signals from tech and defense spending, but geopolitical risks and inflationary pressures require close monitoring.

Operating performance

• Operating revenue for Jan–May 2026 was NT$140,009 million, down 2% YoY; operating income rose 280% YoY to NT$1,527 million, with a margin of 1.09%.

• Q1 2026 sales volume increased slightly to 1.84 million tons, driven by easing policy uncertainty and active restocking.

• Export sales accounted for 40% of Q1 2026 volume, with Southeast Asia and Japan as key markets.

• Q1 2026 consolidated net loss was NT$1,860 million, compared to a profit of NT$814 million in Q1 2025; EPS was -NT$0.16.

• Debt management strategies include diversified financing and maintaining strong credit ratings, with net debt at NT$153,881 million as of March 2026.

Key strategies

• Capacity optimization includes decommissioning the No. 1 blast furnace by Q1 2029, consolidating production lines, and targeting NT$1 billion in annual benefits.

• Advanced Premium Steel (APS) sales reached 193,000 tons in Q1 2026, accounting for 11.5% of sales volume and over 90% of gross profits.

• Supply chain transformation focuses on green steel, smart manufacturing, and expanding into EV, drone, and robot industries.

• Green business initiatives include offshore wind and solar power, with improved wind farm performance and solar capacity expected to reach 120MW by 2033.

• Decarbonization pathway targets 25% emissions reduction by 2030 and carbon neutrality by 2050, leveraging hydrogen steelmaking and high recycled content products.