Chinese expert: Smaller price jumps in second half

Chinese expert: Smaller price jumps in second half

Qi Xiangdong, deputy secretary of the China Iron and Steel Association (CISA), assured that the steel prices in China would begin to mellow during the second half of the year. While Mr. Xiangdong admitted there would still be some slight fluctuations in prices during the remainder of the year, the fluctuations would be nowhere near as drastic as the large ups and downs the market experienced during the first half. New capacity expansions came on stream during the early part of the year, leading to an increase in overall output. Initially, traders were happy to export the additional output, which in turn kept prices on the rise during the early part of the year. China’s comprehensive steel price index peaked at 138.33 points by the end of March 2005. However, a series of macroeconomic controls introduced by Beijing – especially in the real estate industry – led to a decrease in the consumption of low-end steel products. Furthermore, Beijing’s cancellation of export tax rebates on various steel products discouraged exports and led to an increase in domestic supply. The ensuing oversupply in the domestic market saw the comprehensive steel price index tumble to 123.85 points by the end of June. Hot rolled sheet and coil was especially hard hit, with prices dropping nearly 30 percent from the peak in March.