Baoshan Steel Cuts Prices, First Time in Three Months

By Helen Yuan

March 3 (Bloomberg) -- Baoshan Iron & Steel Co., China’s biggest steelmaker, cut prices for the first time in three months after production in the country rose faster than a demand recovery, Mysteel Research Institute said.

Baoshan Steel reduced prices of hot-rolled coil by 5.3 percent to 3,542 yuan a metric ton, research company Mysteel said. Cold-rolled coil was cut by 4.8 percent to between 3,926 yuan and 4,026 yuan a ton. Calls to Baoshan were not immediately answered.

Benchmark steel prices in China, the world’s largest consumer of the material, have fallen 12 percent since Feb. 4 after mills increased output on expectation of demand coming from the government’s 4 trillion yuan ($585 billion) stimulus package. More than 60 percent of Chinese mills are losing money now, the China Iron and Steel Association said Feb. 23.

“Steel stockpiles are very high in China,” Hu Yanping, an analyst at Umetal.com, said in a note today on the price cuts. “Baoshan is cautious about the market outlook in the near future. The global recession is far from ending.”

Steel prices in China hit the lowest in at least six years in November before the government announced its stimulus plan, which would build infrastructure projects including railways and ports. Benchmark cash prices now are still 29 percent higher than the low then.

China’s inventories of hot-rolled coil have reached 2.83 million tons, while cold-rolled coil was 1.27 million tons, “a high” compared with the past few years, Hu said, without giving details.

Still, the government may announce more measures during the People’s National Congress, which starts this week, Citic Securities Co.’s chief analyst Zhou Xizeng said.

“Baoshan’s cuts are smaller than expected. That indicates demand may rebound after NPC,” said Zhou.

To contact the reporter on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net