According to China Iron & Steel Association released data showed, by end March, the composite steel price index was 97.5 down by 44.72 or 31.42%; this has fallen below the benchmark of 100 points the association took in 1994.
In the meanwhile, steel product export also plunged with the first quarter shipments down 54.9%YoY to 5.14 million tonnes. In March alone, the export was1.67 million tonnes compared with 1.27 million tonnes import of steel products and 460,000 tonnes billets, presenting a net import of 60,000 tonnes.
The association attributed the main reason behind the price drop to slower growth in steel-consuming industries and subsequent slow increase in steel demand.
As revealed by the National Bureau of Statistics, investment in housing development grew 4.1% in Q1 2009, with the growth rate decreased 28.2 percentage points; new startup area for construction fell 16.2%; and the added industrial value gained only 8.3% in March down 9.5 percentage points. However, the steel output remained at a high level, citing cumulative production of crude steel at 124.5192 million tonnes for the Q1 equivalent to 1.3835 million tonnes for each day, or an annualized figure of 504.99 million tonnes.
So how could the steelmakers to survive this tough situation? CISA called
1. To control total production and substantially reduce the materials cost, which are guarantees of the survival; then, to organize operation based on market demand, avoid blind expansion of production and check the inventories; to substitute the backward products with the advanced ones and eliminated the outdated capacity; and to build up long-term partnership with the materials suppliers and cut purchase cost for increasing economic benefits.
2. They are suggested to seek broader export channels to ease up the domestic supply pressure. The State Council has adjusted export rebate policy as of April 1st which is to help the exporters cut exporting cost.
3. All steelmakers should strictly follow self-discipline and regulate the market competition order.
4. The steel producers should abide by WTO rules and resist trade protectionism and low-priced dumping. They are called to actively respond to these problems, participate in international competition through equal competition, dialogue and cooperation, and on the other, legal weapons to hold out dumping.