On March 10, China's Ministry of Commerce (MOC) stated that in the week from February 28 to March 6 Chinese domestic finished steel prices dropped by 1.6 percent week on week on average - the second consecutive week in which a decrease has been recorded. The MOC indicated that three factors have been behind the price decline. The first factor is increased supply, with outputs from mills having risen. The second factor is higher inventory. In early March, domestic steel inventory in China was up 53.9 percent as compared to early February. Thirdly, raw material prices have dropped. The spot market price of iron ore has dropped and so steelmakers' costs have also decreased. In the week in question, domestic iron ore prices were down 4.7 percent on average as compared with mid-February levels.
According to the MOC, it is expected that domestic finished steel prices will continue to drop in the short term, however, as construction projects enter the high season and as outputs of household appliances and automobiles increase, decreases in finished steel prices may be limited.