Chinese Major Makers Move to Output Reductions in July

Chinese major steel makers seem to start output reductions when steel market prices have dropped. Japanese large trader source said Chinese steel makers launched output reduction policies to balance supply and demand balance. Wuhan Steel, Sha Steel, and Pzh Steel are said to have started output reductions in July, according to China News. Chinese government announced the country’s iron ore import decreased by 9.1% to 47.17 million tonnes in June from May. The import decreased for 3 consecutive months and represented below 50 million tonnes for the first time in 4 months. Less ore import indicates lower Chinese crude steel output from July.

Chinese crude steel output exceeded 50 million tonnes for March-May and hit record 56.14 million tonnes in May. The iron ore import increased by 4.1% to 309.28 million tonnes for January-June compared with the same period of 2009.

On the other hand, Chinese averaged market price of hot coil lowered by 600 yuan for the size with 2.75 millimeters of thickness in July 5-9 week compared with the third week of April. Market prices have dropped for flat and long products.

Chinese iron ore import price rose by 8.9% to US$ 139.9 in June from May, which surged for 7 consecutive months. Major raw material supplies raised iron ore price largely for July-September but Chinese domestic spot price is declining.