Reuters quoted a senior official of Shaoguan Iron and Steel Group said China steel prices are likely to continue to weaken in the third quarter as the steel industry suffers from growing supply and ebbing demand.

Mr Deng Yong deputy head of the strategic development department said "The steel industry has entered a long downturn. Some mills have already cut production in June."

He said that "Steel prices are likely to keep falling in the next three or even five months. The biggest uncertainty comes from the property sector and demand growth in other sectors is also slowing down."

Mr Deng said "Steel mills are struggling they are either making only a tiny profit or are already in the red, adding that spot iron ore prices were not falling as sharply as steel prices.”

Shaoguan Steel amid sized steel mill holds a 20% stake in Guangdong Steel Group in which Baosteel Group holds the rest 80% stake.

Steel prices in China have softened in recent weeks on poor demand prospects in the domestic market, and as the government removed export rebates for some products.

(Sourced from Reuters)