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Steel giants reduce production to prevent price falling

By Xu Shenglan (chinadaily.com.cn)
Updated: 2008-10-07 11:24

Four domestic steel giants, Hebei Iron & Steel, Shougang Group, Shandong Steel Group and Anyang Iron & Steel Inc, have decided to reduce production by 20 percent in October to prevent a further plunge in steel prices, which fell more than 5 percent before Golden Week holiday.

Analysts said that the falling trend for steel production has been formed after a new wave of steel price plunges led by shrinking domestic demand and surging raw material prices.

Steel prices in Shanghai and Tianjin markets are 5-10 percent less than a week ago, and it is estimated that prices of some steel varieties will keep falling in the next week; a Mysteel analyst said to the China Securities Journal.

Experts said that steel prices have remained high since June, but now the trend has changed because of iron ore, coke and other raw material prices falling.

Declined fine iron powder prices and deal volumes led to market's low performance last week. Fine iron powder prices in Tangshan region fell 180 yuan to 1,050 yuan per ton.

Imported mine market performances remained weak on September 28 with low deals and high storage, and its trend is not positive. Indian refined ferrous powder (63.5 percent in fineness) price dropped 170 yuan to 930-960 yuan per ton.

The domestic coke market performance remains weak with inactive deals and purchasing of steel companies. Now the factory price of coking enterprises in Hebei province averages 2,400-2,500 yuan per ton, steel firms' purchasing price in the Handan area is 2,400-2,500 yuan per ton, and that in Tangshan is 2,500 yuan per ton with a low of 2,000 yuan per ton.

Domestic iron & steel giants will implement five measures to deal with the market changes: controlling production to maintain supply and demand balance, further reducing raw materials' purchasing prices to cut down storage, enhancing communication between companies to ensure smooth channels, intensifying the constraints of steel enterprises and dealers' sales, adjusting product structure and the flow of resources to avoid disorderly regional price competition.