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Taiwan's China Steel Corp. (2002.TW) will cut the domestic prices of its steel products in the January-February period by an average of 1.33% from December, the company said Thursday.

The company decided to cut the prices despite strong steel demand in Asia because of weaker-than-expected demand from its local downstream customers and due to traditionally weak demand during the Chinese Lunar New Year in February, Taiwan's largest steel producer by revenue said in a statement.

This is the company's second consecutive cut in the prices of domestic steel products after it lowered December prices by 4.45%. The latest round of cuts will mean an average decrease of NT$280 a metric ton in the period.

The price cuts will range from NT$1,384/ton for steel plates, used in construction, to NT$129/ton for cold-rolled sheets and coils, which are used in the car industry, according to the statement.

Prices of hot-dip galvanized coils and sheets, used in car parts and computer casing, will be cut by NT$1,157/ton, while prices of hot-rolled sheets and coils, used in steel pipes and car components, will remain unchanged, China Steel said in the statement.

The company decided to cut steel-plate prices in a move against cheap imports from Japan and South Korea, it said.

Since the company has a practice of giving price rebates for the previous period if cuts are planned for the subsequent period, the January-February price cut effectively means an additional price cut for the December period as well.

China Steel sells about 75% of its production domestically and the rest to other Asian countries, with two-thirds of the exports going to China and Japan. Since a large part of the company's domestic output gets exported by China Steel's domestic customers, over half of the company's total output eventually goes overseas.

China Steel's January-September net profit plunged 90% from a year earlier while revenue slumped 43% because of weak steel prices in the first half.

Regarding next year, steel demand from China will likely lead to an iron ore price hike of 30%-35% by the three large iron ore miners, China Steel said, referring to Brazilian miner Vale SA (VALE) and Anglo-Australian diversified miners BHP Billiton Ltd. (BHP) and Rio Tinto PLC (RTP).

"Due to the boost from both higher (production) costs and stronger demand, the trend of higher steel prices in Asia will likely be stronger next year than this year," China Steel said.

-By Alex Pevzner, Dow Jones Newswires; 8862-2502-2557; alex.pevzner@dowjones.com