Securities Times reported that last week, one of Chinese steel giants, Baosteel has dramatically lowered its EXW prices, leading domestic major steelmakers to continue reducing the prices.
Some analysts and research institutes believed that the whole steel industry may gradually enter into a low profit period At present, some major steel mills, like Wuhan Steel and Angang etc have reduced HRC and CRC by CNY 300 per tonne and CNY 500 per tonne to CNY 1,000 per tonne and galvanized steel by CNY 300 per tonne to CNY 600 per tonne which may further impact the future steel market.
It is easy to discover that the down-stream industry, like auto manufacturing, household electrical appliance and construction industry etc have stepped into their dull season with a slowdown in steel demand. Besides, national tightening financial policy and strong macro-controls in China''s house market are the most important elements which restrict the steel prices to go up.
Due to the increasing production costs, many mills decided to release their capacities in the first quarter this year to ensure profit maximization. As learned, the steel output hit a record high in March and April. And moreover, most mills showed an obvious sign of sliding in the sector of orders. As predicted, the steel export would experience a decline in early May. Meanwhile, three giants put forward an increase in iron ore prices in Q3 by 25%, that is to say, the FOB prices would stand at USD 150 per tonne after the price hikes.