Baoshan Iron and Steel Co has cut prices of steel products for July delivery by as much as 17 percent as demand has tumbled due to signs of slowing economic growth, the first time it has reduced prices since November.
The firm reduced the prices of the steel product that is mainly used in automobiles by 1,300 yuan (US$190) per ton to reflect a slower growth in the Chinese auto industry, Shanghai Securities New reported.
Prices of hot-rolled products were cut by 400 yuan to 600 yuan per ton and prices of cold-rolled products fell by 800 yuan a ton for July delivery.
"The Purchasing Managers Index, a gauge of manufacturing strength, showed a month-on-month dip in May, signaling economic growth has lost some steam," said Sun Feng, an analyst at consultancy CEBM Group.
Baosteel, which mainly supplies to auto and home appliance makers, has been hurt by moderating growth in these sectors.
Auto output fell by 14 percent to 1.31 million units in May, a second straight month-on-month decline.
"Demand for steel is set to remain slack until the fourth quarter," Sun said.
Some steel makers may even be swimming in red ink again, squeezed by lower prices and higher iron ore prices, said Luo Bingsheng, vice chairman of the China Iron and Steel Association.