steel china.jpg (Photo : Reuters)
As global use of steel continues to decline, China is forced to mobilize its copious supply of the metal by offering the industrial produce at lower prices to foreign buyers.
The China Iron & Steel Association (CISA) revealed on Oct. 13, Monday, that the price of steel in China has kept a downhill movement for three months, with the Steel Composite Price Index plunging more than 13 percent since Dec. 2013.
Despite China's well-doing real-estate and construction industry, the price of steel is only 3,212 yuan ($520) per metric ton, cheaper by 28 percent than the 2012 average price.
CIMB, a leading financial institution based in Kuala Lumpur, said that the low demand for steel and its oversupply is the reason behind China's steel problem.
China's economic shift and slacking property market are the causes of the issue, said the World Steel Association.
According to CISA, tight competition among Chinese steel mills was the result of pressure from "expanding inventories and sluggish domestic demand."
Steel makers in Asia and around the world are affected by China's oversupply of steel. As the country cuts the product's price, exporters cannot take advantage of price-for-volume strategy.
In September, China customs recorded an increase of 4.5 percent in steel exports, which amounted to 7.2 million metric tons. However, with prices falling by 10 percent, breaking even was the immediate goal.
The World Steel Association provided a not-so-promising forecast, saying that global steel consumption will remain to be slow in 2014, with "weaker performance in the emerging and developing economies."
