Four Chinese steel mills set to cut production on slump demands

Tag : iron and steel

By Xinhua writer Jiang Xufeng
BEIJING, Oct. 6 (Xinhua) -- Several leading Chinese steel mills areset to cut production to cope with the pressure of weak demandhanging over their iron-smelting furnaces.
Shougang Group and three other big domestic iron and steelmanufacturers will slash 20 percent of their production this monthamid slack domestic demand and dropping steel prices, according toMonday's China Securities Journal.
These major steel makers included Hebei Iron and Steel Group,Shandong Iron and Steel Group and Anyang Iron and Steel Group.
Hu Kai, a senior industry analyst with the Umetal.com website, toldXinhua on Monday the sagging price was the main cause of theproduction reduction.
"There is no signal that the steel product price would be ratchetedup in the near future, as some steel product prices remain highcompared to previous years, construction-use steel products inparticular."
China's real estate sector was currently in its nadir, which alsopulled down steel product consumption, he added.
Steel prices on the domestic market dropped 5 percent in the weekpreceding the weeklong National Day holiday that started Sept. 29,according to the newspaper citing Xu Xiangchun, a mysteel.comanalyst.
These steel mills would endeavor to further reduce the purchasingprice of raw materials, adjust product mix and enhancecommunication among the companies respective management, accordingto the Beijing-based newspaper.
Hu said to some extent these companies had overreacted to thesluggish market as the output cutback exceeded the actual marketdemand decline.
Beijing-based Shougang Group declined to comment on the news reportwhen reached by Xinhua. Its shares shed 5.31 percent to 3.39 yuan(about 50 U.S. cents) per share on Monday trading.