China Daily reported that China steel prices fell to CNY 3,684 a metric ton on Wednesday, their lowest level since late 2009, and senior officials said the fourth quarter will be even more difficult for the industry.
Mr Zhu Xian a senior analyst at the industrial consultancy Mysteel said steel prices are now dropping at a daily rate of more than CNY 15 a ton. He predicted that the price will have fallen by another CNY 50 a ton by the end of Friday.
Mr Wang Guoqing deputy director of Lange Steel Information Research Center an industrial consultancy based in Beijing said "Steel prices have now come back to the same level they were at in October 2009."
According to Lange market monitoring system China steel inventories were 14.87 million tons on Aug 24, 380,900 tons less than the previous week which represented the fastest drop in several weeks. However, crude steel output is still increasing.
According to the China Iron and Steel Association, its member companies had a daily output of 1.63 million tons in early August an increase of 1.24% compared with late July. The real estate industry a key factor in China steel demand experienced slower investment growth in the first half of 2012.
China investment in real estate totalled CNY 3.68 trillion in the first seven months a 15.4% increase YoY but 1.2 points down compared to the first six months of the year. During the first seven months of last year, the investment growth rate in the real estate industry had been 33.6%.
Ms Ji Xiaoyun an analyst at Lange said "Downstream demand for steel products is still uncertain and is unlikely to rebound in the short term."
She said that "The central government's controls on the real estate industry are still tight, which indicates it will not contribute much more than it currently does to steel demand. But it is worth noting, August is the traditional weak season for steel prices."
She said major domestic steel companies have all cut their product prices by an average of CNY 10 to CNY 30 for September to adjust to market conditions.
Mr Gao Cheng sales manager at Tangshan Liangang Steel Rolling Co Ltd in Hebei province among China largest steel companies said "Many steel mills have stopped production for maintenance in Tangshan."
He said his company still has a daily output of 25 million tons which he considers a good performance.
Mr Xu Xiangchun, an analyst at Mysteel said that only 60% of producers of construction steel in the city are currently producing. He said that "At the beginning of this month, the figure was 66%."
To boost economic growth, the Chinese government has said it will accelerate the speed at which it approves infrastructure construction projects.
Source - China Daily
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