The China Iron and Steel Association (CISA) has lately stated that the continuous decrease seen in domestic steel prices in September was due to the excessive release of production capacity and the increasing imbalance between supply and demand. The CISA went on to say that the future market is expected to move on a stable trend, but will still be impacted by capacity release.
According to the CISA, there is limited room for further descending movement in local steel prices on account of the shrinkage of the profit range available to the mills. The figures indicate that medium- and large-scale mills in China registered a 77.65 percent drop in their net profits for the first nine months of this year. Given the slump already registered by steel prices and the support provided by production costs, the room for downward movement in China's steel market is becoming smaller and smaller.