China's top steel maker, Baoshan Iron & Steel Co. Ltd. (Baosteel), said it would cut prices for a second straight month in May as there was no end in sight to a deepening demand decline in the world's No. 1 consumer.
Prices would be cut by 200 yuan (29.30 U.S. dollars) to 500 yuan per tonne, the company said Wednesday. Steel prices vary, but a commonly used type of cold-rolled steel will cost 3,726 yuan per tonne after the change.
Analysts were divided on the cuts. Umetal analyst Hu Yanping said the price cuts weren't large enough, as the new prices would still be higher than the company's major domestic rivals.
However, Wang Jianhua, deputy director of the Mysteel Research Institute, said the company's decision was reasonable and reflected market trends.
Baosteel chairman Xu Lejiang said Monday that steel prices would remain low in the second quarter because of the dim prospect for demand recovery amid global financial woes.
He said it would "take time" for China's economic stimulus measures to translate into real demand, but the company would not post a first-quarter loss despite difficult market conditions.
Orient Securities Futures analyst Huang Shuai said steel supply had far exceeded demand during the first two months because production at small and medium-sized steel companies grew too fast. Huang said steel producers of all sizes turned out even more in February than in January.
Meanwhile, steel exports shrank by a staggering 62 percent in February to 1.56 million tonnes, hitting a 52-month low.
Huang predicted exports would continue shrinking amid narrowing price margins between domestic and foreign suppliers and rising concerns over trade protectionism.