CISA calls on steel mills to curb production for healthy development

The China Iron & Steel Association (CISA) has called on steelmakers across the country to take the initiative to reduce their production intensity to meet the needs of end-users while maintaining the balance between supply and demand, according to a written proposal released on its WeChat public account on Thursday.

China's steel prices have moved down fast after the Chinese New Year holiday, and the domestic steel market and steel producers have been plagued by multiple factors including high levels of output, costs and inventories, alongside low demand, prices and efficiency, the association said.

Slowing demand from end-users has been the main reason for the persistent weakness in domestic steel prices, as China's real estate market continues trending downwards and the infrastructure construction has also slowed its pace recently. The association then pointed out that the key is for steel mills to play a proactive role in balancing supply and demand in the market.

The CISA suggested Chinese steelmakers schedule their production based on steel sales and business performance and pursue high-quality and effective development. Major steelmakers should take the lead in reducing ineffective supply, promoting the smooth running of the domestic steel market.

Meanwhile, Chinese steel mills should be sensible about market fluctuations and strengthen management of their sales channels to prevent low-price dumping and vicious competition, according to the proposal.

Domestic steel producers also need to enhance communication and cooperation with their upstream and downstream partners for mutual benefits and win-win progress, it added.

China's steel consumption has peaked, and the structure of steel demand has been evolving amid high-quality development, the CISA iterated. For now, Chinese steel producers should rationally monitor and analyze the market, adjust their pace of production based on market changes, and reduce steel inventories as soon as possible so as to achieve a dynamic matching of supply and demand, stated the proposal.

As of March 28, China's national price of HRB400E 20mm dia rebar was assessed by Mysteel at Yuan 3,633/tonne ($503/t) including the 13% VAT, sliding by a total of Yuan 409/t from February 18, the first working day in China after the CNY break, and the spot price of Q235 4.75mm hot-rolled coil under Mysteel's assessment had also slipped by Yuan 331/t to Yuan 3,777/t including the VAT during the same period.

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Alyssa Ren, rentingting@mysteel.com