21 Century Business Herald reported that majority of Chinese steelmakers have been cutting or have planned to cut productions under the pressures of falling price, high level stock and slimming demand.
The paper learned from Shandong Steel Group that it’s enlarging the cuts to cover a bigger part of the productions as the falling price has been close to that it can bear.
In Hebei, the steel stockpiles are reportedly above the warning level and will increase further if the price drops more.
The paper cited Mysteel supervisor consultant Mr Xu XIangchun as saying the lofty stocks are resulted from the traders reluctance to sell at low price. But traders are also troubled. They get the products from the mills on monthly basis when they are selling them on the market, the price has fallen by hundreds of yuan as in June. Though the mills will offer some compensation they still make loss of some CNY 200 to CNY 300 for per ton transacted.
A Shanghai based trading house said it can make CNY 200 per tonne to CNY 300 per tonne profit for selling HRC in the first half year, but now the loss is up to CNY 500 per tonne in the worst occasion. The market price is actually lagging behind the ex-mill price.
Slimming demand from the end users cooled enthusiasm of the mills for production.