BEIJING - An
oversupply of steel products has worsened in
China's domestic market in the past two months, Wu
Xichun, former president of the China Iron and
Steel Association, was quoted by the China
Securities Journal as saying recently.
Wu
made the remark when attending a high-level
seminar on China's rolled steel market in Shanghai. This was not
caused by insufficient demand, but by increase of
net import and domestic supply, he said. The steel
price drop in international and domestic
markets since April this year
was natural, and the competition and mergers among
domestic steel firms will decide the country's
steel market performance in the latter part of
this year, he was quoted as saying.
In
July and August this year, China turned from a
steel net exporter into a steel net importer, the
newspaper reported. In August China only exported
1.33 million tons of rolled steel, down 0.87
million tons from June. The worsening steel
oversupply in July and August has led to price
falls in August and September, Wu said.
The problem is not on the side of demand,
he said. In the first eight months this year,
China's urban fixed asset investment grew 27.4%,
and in the first seven months, China's industrial
added value increased 16.3%, according to the
newspaper.
The growth rate of iron and
steel output during the period, however, was much
faster than that of demand. In the first eight
months, China's pig iron output surged 31.87%, and
rolled steel output, 26.22%. If China's steel
output decreases in the next few months, the steel
market will be stabilized. Otherwise steel prices
in the domestic market will continue to drop, Wu
said. He urged import reductions and output
limitation measures in the steel sector.
