Domestic steel product prices to rebound in November at the earliest
Shanghai. September 18. INTERFAX-CHINA - Domestic steel product prices are expected to rebound in November or December 2009, as production cuts at Chinese steel mills are inevitable, an employee with Hebei Iron and Steel Group (Hebei Steel Group) said on Sept. 18 in Shanghai.
"Large-sized steel mills, including Hebei Steel Group's Tangshan branch, are currently losing approximately RMB 100 ($14.65) per ton of hot-rolled steel coil sold, and smaller steel mills are losing more. It is expected that domestic steel mills, both large and small, will scale back production in September and October," Zhang Fenghua, export department manager of Hebei Steel Group International Trade Corp. Tangshan branch, told Interfax on the sidelines of the 2009 International Steel Forum and China Steel Trade Fair in Shanghai.
The imminent production cuts by steel mills will support a price rebound in November or December, Zhang said. He added that the Tangshan branch has not yet planned its production cuts.
At present, the production cost of the Tangshan branch's hot-rolled steel coil is between RMB 3,600 ($527.31) per ton and RMB 3,700 ($541.96) per ton, while the average domestic spot price is RMB 3,500 ($512.66) per ton.
Some small-sized steel mills have already suspended production, according to some industry insiders.
Hebei Steel Group has a production capacity of 33 million tons of crude steel per annum, and its Tangshan branch can produce 18 milllion tons per annum.