More Chinese steelmakers cut output
Several more Chinese steelmakers joined in the production cuts bandwagon on Monday July 30 to relieve sales pressure amid a weak market.
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Echeng Steel, a member of Wuhan Steel Group, suspended its 1,080 cu metre blast furnace, which will reduce output by 60,000 tonne per month.
Tonghua Steel, a steelmaker under the Shougang Group, is overhauling its 1,060 cu metre blast furnace over seven days, which will cut production by 2,300 tonnes per day.
Shougang is putting one wire rod production line into maintenance, which will reduce production by 15,000 tonnes.
“It is very necessary for steel mills to trim production further so that spot steel prices could stop falling,” a trader in Shanghai said.
About two million tonnes of output will be cut during this round of maintenance and overhauls, he added.
But some market participants said more production cuts are necessary in coming weeks to ensure a sustainable rise in steel prices.
“A decrease of 2 million tonnes of steel may not be enough to support a strong price rebound,” a stockist in Tianjin said.
Major steelmakers will have to cut more output if downstream demand does not pick up soon, he added.
China’s spot market prices for steel continued to rise on Monday.
Prices for grade III rebar in Beijing rose 10-80 yuan per tonne from last Friday to 3,720-3,840 yuan ($588-607) per tonne while in Shanghai, the product was traded 40-50 yuan higher at 3,520-3,690 yuan per tonne.