The vice general secretary of the China Iron and Steel Association (CISA), Qi Xiangdong, stated on July 15 that domestic steel prices are expected to recover in the near future following the recent sudden slump caused by changes in China's macroeconomic policies and decreased demand since late April.
Mr. Qi remarked, "The slump in steel prices is abnormal, and has resulted in great losses at steel companies." Meanwhile, he estimated that China's steel consumption in 2010 may increase by 10 percent to around 50 million mt.
The CISA official added that it will be hard for the steel companies to increase their profits in the second half of the year under pressure from both increased iron ore prices and decreased steel prices. The profits of the mills may touch bottom in July, he said. Based on the current supply-demand situation, long products and cold rolled sheet have followed a positive trend, while hot rolled coil and pipes & tubes have been under the most pressure, Mr. Qi commented.
Mr. Qi indicated three factors which could help stabilize steel prices and restore market confidence. Firstly, the consistency and stability of China's macroeconomic policy should be maintained so as to stabilize sentiment among domestic enterprises. Secondly, steel companies should maintain a balance between supply and demand by setting production plans in accordance with sale volumes. Thirdly, reasonable inventory levels should be maintained at steel companies, distributors and end-customers.