China Iron and Steel Association (CISA) official Wu Xichun has said that 40 percent of CISA members have already implemented production cutbacks or overhauls. Since rising raw materials prices are causing production costs to outstrip steel sales prices, it is inevitable that Chinese steelmakers will cut production in July and August, he said.
Mr. Wu stated that the estimated annual output of crude steel in China had been revised down to 610 million mt from the previously anticipated 650 million mt, based on the average daily output of crude steel in July, mainly due to the production cutbacks implemented by the Chinese steel producers. He added that the production cutbacks may have something to do with seasonal factors, but are mainly happening because that the mills are unable to shoulder the great pressure they are under.
In Mr. Wu's view, the destocking process in the steel industry will be a slow one. He said that steel prices are unlikely to rebound rapidly until the steel industry has completed its destocking process and has reduced its production to certain levels.