Nine of China's steel companies have agreed to work together to
help stabilize steel prices that have been on a steady decline
since April, according to the China Iron and Steel Association (CISA) on
Monday.
The nine companies, whose production capacity accounts for half
of China’s total, are Shanghai Baosteel Group Corporation, Tangshan
Steel Corporation, Anshan Iron and Steel Group Corporation, Wuhan
Iron and Steel Corporation, Benxi Steel Company, Ma'anshan Iron and
Steel Corporation, Baotou Iron and Steel Corporation, Kunming Iron
and Steel Corporation and Panzhihua Steel Company.
In the first five months of this year, China's steel output
increased by 25.43 percent. It imported 10.7 million tons and
exported 9.37 million tons of steel.
Based on research and analyses, the group has come up with four
proposals to address the continued decline of steel prices, and to
carve out a transparent, fair and rational steel trade
environment.
First, they propose to appeal to the relevant government
departments to strengthen controls over the import of low-end
rolled steel products and, if necessary, to adopt anti-dumping
measures.
Second, they want to call on domestic companies to optimize
production structures and to reasonably increase stockpiles.
Third, they object to steel companies publicizing any policy
that guarantees value against price fluctuations or any retroactive
policy that undercuts the market.
Fourth, they propose the revocation of trade agency licenses of
those who manipulate market prices.
China's steel prices skyrocketed after Shanghai-based Baosteel
accepted a 71.5 percent price hike for iron ore in an agreement
with international suppliers in February.
But, prices nose-dived in April due to government macro-control
measures to cool off overheated investment in the steel industry
and market speculation.
Current prices of some steel products have dropped by 1,000 yuan
per ton compared with Q1 (first quarter 2005) prices. Prices of
certain products have fallen by 15 to 20 percent, further enlarging
the international and domestic price differential. Prices of wire
and threading steel have fallen below production costs, which a
CISA official said is abnormal.
CISA said that declining prices have greatly affected the normal
market order of the steel trade and has impaired the legitimate
rights and interests of trade agencies and steel companies. If left
uncontrolled, it could threaten its continued development and the
development of other related industries.
The group agreed that there should still be room for steel
prices to rebound, said Zhang Jianzhong, board chairman secretary
of Tangshan Steel in Hebei
Province.
Zhang added that he is optimistic about the effectiveness of
their four proposals.
He said a stable steel market needs a process of relationship
building between buyers and sellers. Abnormal price fluctuations
are in many cases caused by hindered communication between the
two.
(China.org.cn by Yuan Fang July 8, 2005)