"The entire iron and steel market experienced a collapse in August, while any steel enterprise in this period of sharp declines in steel prices will certainly suffer a loss" said Wu Xichun, honorary chairman of the China Iron and Steel Association (CISA).
Mr. Wu stated that the current difficulties arose from China's RMB 4 trillion stimulus program for infrastructure construction implemented as of 2008. Under the impact of this plan, he said, domestic steel capacity increased dramatically, thus bringing about high import prices for iron ore. The CISA official also stated that billet and finished product imports to China had increased, while the Chinese steel industry has been unable to make profits against the background of the overseas economic crisis.
Reflecting the sharp decreases seen in domestic steel prices in China in recent months, the domestic steel price index issued by the CISA declined from 121.19 points at the end of April this year to 103.28 points on August 24. In particular, the CISA price index for hot rolled coil (HRC) declined to 97 points as of August 24.