At a recent meeting held by China's Iron and Steel Association (CISA), participants expressed the view that in March Chinese steel companies could register great financial losses.
According to the CISA data, during the first two months of 2009 China's daily production increased to 1.3675 million mt. CISA secretary general Shan Shanghua stated that the irrational increase in production outputs in the January-February period had contributed to high levels of iron ore imports. Mr. Shan went on to say that Chinese steel producers are facing great pressure since their outputs are high but their sales are very low. Strong inventory levels, he said, are leading to a sharp decline in steel prices and also to a lack of balance between supply and demand.
Meanwhile, according to a CISA survey of 25 large- and medium-sized steel exporters, during the first two months of 2009 their steel export volumes slumped greatly. Also, according to the same survey, in 2009 steel export tonnages from China are expected to drop by 80 percent, considerably worse than the previously estimated rate of 50 percent. In March China could become a net importer of steel as its exports are so low.
Mr. Shan stated that it is urgent to make some adjustments to China's steel export policy since the appreciation of RMB has made the country's steel exports less competitive. The CISA suggested that the government should implement certain measures such as anti-dumping investigations in order to protect China's steel industry from imports.