Steel Slowdown Forces 40% of Chinese Mills to Cut Output, Maintain Plants

Slowing steel demand in China, the world’s largest consumer of the metal, forced 40 percent of mills to cut output or put plants on maintenance this year, the China Iron & Steel Association said.

Costs of production have risen while steel prices have dropped since April, Luo Bingsheng, vice chairman of the China Iron & Steel Association said today at a press conference in Beijing.

“Facing higher costs and lower prices, steelmakers’ margins will be further reduced, so the situation this quarter is very tough,” Luo said.

Domestic prices of hot-rolled coil fell for seven straight weeks to July 16, as government measures to curb property speculation damped demand for steel. The average import costs of iron ore, a key steelmaking ingredient, in China jumped 46.4 percent in the first half from a year ago, the steel association said today.

--Xiao Yu. Editors: Tan Hwee Ann, Andrew Hobbs.

To contact the Bloomberg News staff on this story: Xiao Yu in Beijing at yxiao@bloomberg.net

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