Shanghai, October 13 (Gasgoo.com) With the market demand for steel slowing down and steel price falling, Hebei Steel Group has decided to cut production by another 10%-20% following the 20% decrease in its current production, said China Business News today. This move is seen as a measure to cut the manufacturing costs and stop the plummeting of market prices.
After restructuring its two biggest steel makers Handan steel, Tangshan steel in the southern Chinese province, Hebei Steel Group now has an annual capacity of nearly 31.6 million tons, rivaling the Shanghai-based Baosteel, China's No. 1 steel giant. Heibei Steel Group has another three subsidiaries, which are Xuanhua Steel, Wuyang Steel and Chengde Steel.
Last week, the four large steel markers in northern China -- Hebei Iron & Steel, Shougang Group, Shandong Steel Group and Anyang Iron & Steel Inc -- announced to reduce production by 20% starting October to prevent a further plunge in steel prices, which fell more than 5% before Golden Week holiday around October 1, with the prices of many steel products falling by 1,000 yuan ($14.7) / ton.
The falling trend for steel production has been formed after a new wave of steel price plunges led by shrinking domestic demand and surging raw material prices. Steel prices in Shanghai and Tianjin markets are 5% to 10% less than a week ago, and it is estimated that prices of some steel varieties will keep falling this week.
Steel prices have remained high since June, but now the trend has changed because of iron ore, coke and other raw material prices falling. Some steel products in the Chinese market have been marked down further this month by about 600 yuan / ton. The current economic downturn in China is blamed mainly on the U.S. financial crisis.