Falling steel price forces smaller mills in Hebei to cut output

Thursday, 17 Sep 2009

According to Mr Liu Xiaoning analyst with Macquarie Bank, some small and medium steel mills in Hebei province, home to several hundred of small steelmakers have been curtailing steel output as a result of sliding steel prices.

He said that the move might be a prelude to countrywide steel production cutback.

He added that China crude steel output is expected to reduce by 2 million tonnes to 3 million tonnes from the record production level in August.

Mr Liu Xiaoning said "Price plays a key role in it. Those leading big mills might also join the line if domestic steel prices continue to fall down. Fortunately, current spot price remains above the production cost line of these big mills."

After hitting two ten month highs in August domestic steel prices have reversed the hectic uptrend thereafter which therefore put a drag on spot ore price and propel steel mills to axe delivery price.

As the world biggest steel producer, China has been constantly setting new records of monthly steel output. However, collapsing demand from export destinations has posed serious threat of steel glut to domestic market.

(Sourced from MySteel.net)
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