CISA: China’s March steel price index down over 30 percent

Tuesday, 21 April 2009 17:33:23 (GMT+3)   |  
       

According to the data issued by China's Iron and Steel Association (CISA), China's comprehensive steel price index stood at 97.56 points by the end of March, marking a decline of 22.72 points or 31.42 percent year on year. According to the price index calculated by the CISA and set as 100 points in April 1994, the current comprehensive steel price index is lower than that of April 1994.

With steel prices declining, steel export tonnages have also registered a sharp fall. According to Chinese customs, China exported 5.14 million mt of steel in the first quarter of 2009, down 54.9 percent year on year. In March, China exported 1.67 million mt of finished steel and imported 1.27 million mt of finished steel products. Taking into China's net semis imports of 460,000 mt in March, China thus posted net steel product imports of 60,000 mt during the month in question.

The CISA also remarked on the role the slower demand growth for steel has played in the decline of steel prices. According to the data reported by China's National Statistics Bureau, in China the national property investment in Q1 increased by 4.1 percent year on year, 28.2 percentage points lower than the same period of last year in terms of growth rate.

China's domestic steel market is currently in a situation of oversupply, as steel output is relatively high compared with the weak levels of demand. According to the relevant data, China produced 124.5192 million mt of crude steel in Q1 2009, averaging 1.3835 million mt per day, which would mean a total output of 5.0499 billion mt of crude steel for the whole year.

The CISA pointed out that for the domestic steel producers to get out of difficulty they first need to restrict output and reduce raw material costs. It is vital for the mills to plan their production and control their inventories, to use advanced products to substitute for disqualified ones, to build up long-term and win-win relationships with raw material suppliers, so as to lower production costs and thus improve economic benefits.

Secondly, the CISA said, steel producers should further increase steel exports in order to restore the supply-demand balance of the domestic market. China made adjustments to the export tariff rebate for some steel products, effective as of April 1, which has helped reduce the export costs of steel products. Steel producers should implement strong measures to stabilize their shares in the export markets and should exploit new export channels and new product ranges.

Thirdly, medium- and large-sized steel corporations should play a leading role in stabilizing the steel market by standardizing the rules of competition in the market.

Furthermore, the CISA said, steel corporations should follow the WTO rules and oppose protectionism and dumping in international trade. Since the steel demand has continued to be weak over a considerable time, protectionism in international trade has gained ground recently. At the same time, imported semis and finished steels have surged into the Chinese market thanks to the devaluation of currencies of China's neighboring countries. In this context, the Chinese steel corporations should take an active stance, competing in the international markets on the basis of mutual benefit and equal cooperation and, on the other hand, taking anti-dumping measures to prevent the dumping of low-priced imports.


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