It is reported that initiated by Dahan Logistics Co Ltd, a dozen of steel mills and traders in Hunan, including Lianyuan Steel, Xiangtan Steel, Pingxiang Steel, Shuicheng Steel and Dahan Logistics have attended a sodality October 26th to discuss the current market situation, and hold out a gesture to link-up with each other to survive the chill winter.

Mr Hubing head of sales dept. of Valin Lianyuan Steel said that "Steel mills in Hunan all suffer with high pressure. The winter in steel industry has come, and the crisis may be all the worse than that in 1998, Xiangtan Steel Group thus interpreted the current market downturn.”

He said that "Rebar and flats price has fallen to some CNY 3,000 per tonne from the peak point of CNY 6,000 per tonne, almost been halved. Our export tonnages post at 50,000 tonnes to 60,000 tonnes a month in the first half, but plummet to merely 2,000 tonnes in October.

China Iron & Steel Association predicted "Overall profit loss would appear in China's steel sector in October."

Mr Fu Shenglong president of Dahan Holding Group attributes the round of steel price dive to export setback and waning demand from downstream sectors like real estate and manufacturing. He said that steel prices have shot up relentlessly in earlier one or two years under the umbrella of escalating raw materials prices. Therefore, the current price fall is also a round of correction, and has undoubtedly squeezed some bubbles in the price.

Mr Fu added that after five years rapid expansion, China's steel production capacity has jumped to 550m-tpy from the past 100 million n tonnes per year. Price fall will come sooner or later even though the financial crisis has not come. He said that "Market confidence is most important at the moment. China's urbanization just started."

(Source: Sanxiang City Express)