According to an official of China Iron & Steel Association, “China’s steel industry showed signs of recovery in H1 under the effects of the state’s stimulus policies however the quickly resumed capacity put big pressures on the price rebounding.”

The latest data from MIIT showed that daily output of crude steel came back to 1.5 million tonnes in May, 0.29 million tonnes more than the lowest lever in last October as steel prices bottomed out at the same month.

Though the market is of signs of re warming, insiders are still gloomy, thinking that it’s past hope that mills will turn form losses into profits thoroughly this year. According to the data from National Bureau of Statistics, the profits in steel sector posted drop of 97.5%YoY during January to April. There were no material improvements in international steel demands in the first half of this year. Mr Li Xiaobo board chairman of Taiyuan Steel Group expected that China’s steel exports will remain in low level for a long period.

During January to April, China exported steel products of 6.55 million tonnes down by 59.46%YoY and only 2400 tonnes of billets down by 97.6%YoY. As a result, the overcapacity in China and the sluggish demands at abroad sharpened the imbalance between steel supplies and demands in China.

An official from MIIT said domestic mills continuously released their capacities, increasing market stocks, which might pull down steel prices and cut down mill’s profits. Meanwhile, mills rushed to start new projects to develop high end products, but further embittering the overcapacity in high end products. Some analyst pointed out the structural imbalance in China’s steel product mix emerged out and would worsen this year especially in plates market in H2.

In Conclusion, experts suggested that mills should make efforts to control productions and promote the upgrading in industrial structures.