As of November 30, the average prices of HRB 400 rebar and hot rolled plate (HRP) in the Chinese domestic market have declined by RMB 623/mt ($101.5/mt) and RMB 458/mt ($74.6/mt) compared to the beginning of this year, down 17.8 percent and 13 percent, respectively, as announced by China Iron and Steel Association (CISA). During the given period, the respective prices of 62 percent Australian iron ore fines, Chinese domestic production iron ore and domestic coke have declined by RMB 64/mt ($10/mt), RMB 390/mt ($63.5/mt) and RMB 500/mt ($81.4/mt) compared to the beginning of this year, down 47.8 percent, 36.8 percent and 35.7 percent, respectively.
From the beginning of this year, prices of raw materials, which account for 70 percent of production costs, have indicated sharp declines, around two to three times bigger than the decreases seen for finished steel prices in the same period. Although finished steel prices have fallen to low levels this year, steelmakers' profitability has improved a lot due to the larger decreases seen in raw material prices. The CISA estimates that China's steel industry will achieve a gross profit of over RMB 28 billion ($4.56 billion) in the current year, which would be the highest figure in the past three years. However, the CISA noted that the Chinese steel industry still faces problems of tight liquidity and high credit costs.