Baoshan Steel Will Cut Prices, Again, As Demand Slumps

When Baoshan Iron and Steel, the country’s biggest steelmaker, says it is to cut prices by up to 20%, it is a clear sign that the economy is slowing and an industry is in trouble. And even the more so as it is Baoshan’s  third price cut in three months.

Nor is Baoshan alone in price cuts as steelmakers face rising raw material and energy costs, slowing demand and growing supply from new plant. Prices hit a peak in June having risen 23% from the start of the year, but prices have since tumbled back even more, some 30%-40% as carmakers and builders have slashed orders.

Crude steel output, at 39.6 million tonnes was down 9% in September from a year earlier and 7% from the previous month. Prices for some steel products have fallen below the cost of production for all but the most efficient mills.

Last month, four big Chinese steel makers, including Shougang Group, following the lead of Baoshan and ArcelorMittal, agreed to cut production by up to 20%, perhaps until the year-end, to boost prices. The industry is highly fragmented and authorities have been on a push to close down antiquated, polluting and small mills. The slump in prices and demand will only force that process. China’s steelmakers are heading down the familiar path of consolidation.

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One response to “Baoshan Steel Will Cut Prices, Again, As Demand Slumps

  1. Pingback: Flat Output Will Help Steelmakers Strike Better Iron Ore Deals « China Bystander

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