Wang Dayong, general secretary of the Hebei Metallurgical Mining Industry Association, has stated that most steel producers in the province may incur losses since steel prices have declined for ten weeks in succession by an average aggregate margin of over RMB 400/mt ($59/mt). He said that some products have declined by over RMB 1,000/mt ($147/mt) compared with the peak levels for the current year. Since they are caught in the middle between declining steel prices and rising raw material costs, as Mr. Wang said, some major steel producers have already incurred losses and some are considering cutting production, due to difficulties arising from decreased profits and increased inventories
Mr. Wang stated that in the first quarter of this year due to increased steel product prices the steel industry had posted overall profits of RMB 4.264 billion ($628 million), up 83.29 percent year on year. However, he remarked, steel prices declined sharply in Q2. According to the data reported by China's National Development and Reform Commission (NDRC), the comprehensive steel price in China averaged at RMB 4,597/mt ($677/mt) in the second quarter. In particular, the average price of structural steel was RMB 4,172/mt ($614/mt), down by over RMB 400/mt ($59/mt) compared with the peak level for this year.
Mr. Wang stressed that the excess supply caused by overcapacity and the decreased demand resulting from the macro-control measures of the Chinese central government have contributed to the decline in prices in the steel markets.