Wuhan, Anshan Steel to Shut Plants for Maintenance on Prices, UC361 Says

Wuhan Iron & Steel Group, China’s third-biggest steelmaker, and Anshan Iron & Steel Group may carry out plant maintenance this month after prices dropped, researcher UC361.com said.

Wuhan Steel will shut a hot-rolling plant for 10 days and Anshan Steel, part of the country’s fourth-largest producer, will close a cold-rolling line for about half a month, Hu Yanping, a Beijing-based analyst, said in a phone interview.

China’s larger steelmakers are joining smaller rivals in reducing production after prices fell 17 percent from an 18 month-high on April 15 because of slowing demand. Baosteel Group Corp., the nation’s second-biggest mill, said in May that steelmakers may face a “difficult” second half as measures to curb speculation in the property market trim demand.

“Falling steel production may help ease a domestic glut,” Hu wrote today in a report. “But the cuts are still too limited to stall dropping prices.”

Steel production in China, the world’s biggest maker of the metal, may drop 8 percent to 10 percent in the second half from the first six months, UBS AG said this month.

“Maintenance is a usual practice for steelmakers,” Fu Jihui, board secretary of Angang Steel Co., Anshan’s Hong Kong- listed unit, said. “I am unaware of the details.”

Wan Yi, board secretary of Wuhan Iron & Steel Co., Wuhan Steel Group’s listed unit, said he’s unaware of maintenance plans.

Daily Output Drops

China’s daily steel production extended declines in the June 21 to June 31 period, Hu said. Average daily output was 1.71 million metric tons, lower than the 1.77 million tons for June 11 to June 20 and 1.78 million tons in the first ten days of the month, she said, citing data from the China Iron and Steel Association.

Hebei Iron & Steel Co., a unit of Hebei Iron & Steel Group, China’s largest steelmaker, will also shut a hot-rolling production line for about two weeks for maintenance, Hu said. Wang Weigang, a spokesman with Hebei Steel, couldn’t immediately be reached for comment.

Production cuts at steelmakers have led to lower iron ore purchases. Iron ore imports by China, the world’s largest buyer, fell in June for a third month, customs data showed. Imports dropped 9 percent to 47.2 million tons in June from 51.9 million tons in May. The shipments were 15 percent lower than the 55.3 million tons a year earlier.

Jiangsu Shagang Group Co., China’s fourth-biggest steelmaker, and Nanjing Iron & Steel Co. have put off iron ore purchases after prices dropped.

The cost of 62 percent iron ore delivered to Tianjin port dropped for a 14th straight day on July 9 to $121.8 a ton, according to the Steel Index.

--Helen Yuan. Editors: Tan Hwee Ann, Andrew Hobbs.

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

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