Reuters quoted the China Iron & Steel Association said China steel prices hovering near record lows are expected to remain weak in the next few months due to a supply glut that will offset an expected increase in demand.

CISA said low steel prices will also weigh down iron ore prices which are currently trading around their lowest level in more than two and a half years. It said "Steady economic growth is expected in the near future which will support steel demand while steel prices will remain low weighed down by oversupply and high inventories."

CISA said inventories of the five main steel products hot rolled coil, cold rolled coil, rebar, wire rod and plate in 26 major steel markets rose 19% to 15.38 million tonnes by the end of July from the beginning of this year.

The association added that "Iron ore prices will have room to fall further as it faces falling steel prices."

CISA said it expected steel demand to improve within a few months, supported by government measures to boost an economy that is growing at its slowest pace in more than three years.

China produced 1.99 million tonnes of crude steel on a daily basis in July, though swelling inventories and tumbling prices have pushed steel mills to step up maintenance to cut output.

Source - Reuters

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