Steelmakers agree to cut output
Several major mainland steelmakers have agreed to cut production after prices have fallen more than 20 per cent from their peak and show no signs of rebounding even at the end of the lean season.
Zou Jian, an executive director of the China Iron and Steel Association, said steel mills agreed to cut production by 10 to 20 per cent until steel prices stabilised or rebounded. Baosteel Group, mainland's top steelmaker, has cut prices twice since August, forcing other major producers to follow suit.
Fu Jihui, Angang Steel's executive director and company secretary, said the company had no plans to cut production and adjust its full-year production target.
However, he admitted that demand and prices in this quarter were weaker than in the third quarter, traditionally the lean season.
Angang had cut prices of its products for October, he said, without elaborating.
Steelmakers that plan to cut production include Shougang Group, Hebei Iron & Steel Group, Anyang Iron & Steel and Shandong Iron & Steel.
They have a combined annual capacity of about 100 million tonnes, almost 20 per cent of the country's capacity, according to Xinhua.
The sharp slowdown in the property market, which consumes 38 per cent of the country's steel output, was having a severe impact on mainland steel producers, said Jing Ulrich, JP Morgan's chairman of China equities.
In August, mainland's crude steel output fell 1.3 per cent from a year ago, the first contraction in recent years.
Lakshmi Mittal, the chief executive of the world's largest steelmaker ArcelorMittal, said earlier this week the international steel market faced an 'unprecedented situation' as the credit crisis was hurting demand.
Mr Mittal, who has just been named chairman of the World Steel Association, reiterated that ArcelorMittal could cut output by 15 per cent 'globally' if needed.