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Rebound of Steel Prices Not to Fuel Production
The recent rebound of steel prices in China will not prompt the country to increase steel production, a senior official said in Beijing Friday.
Shan Yihe, vice director of the State Administration of Metallurgical Industry (SAMI), attributed the price hike mainly to the reduction of suppliers, the governmental policy of controlling steel production, and the increase of domestic demand, thanks to the country's sustained economic growth and its strategy to develop the western areas.
"The price level is quite reasonable at present, but the speed of rebounding is a bit too fast," he added.
Prices of steel products for construction use have been declining since 1993 due to oversupply. The average per-ton price is less than 2,000 yuan (US$240) last year, 1,100 yuan (US$132.5) lower than the 1993 level.
This April saw substantial price increases, with wholesale prices amounting to about 2,500 yuan (US$301) and retail prices in some areas hitting 2,800 yuan (US$337). These prices spurred many steel producers to consider increasing their production.
Shan warned steel producers and companies of a recurrence of oversupply and urged them to take an objective look at the market.
No administrative measures, however, will be taken by the government to force them to control production, he noted.
A large amount of steel products in China are oversupplied and have suffered falling prices, which prompted the country to cut steel production and eliminate obsolete production capacities.
This year, 103 small steel mills will be closed and production capacity of 4.5 million tons will be cut.
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