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Steel Slowdown Led 40% of Chinese Mills to Cut Output

Aug. 3 (Bloomberg) -- 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.

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

To contact the editor responsible for this story Andrew Hobbs in Sydney at ahobbs@bloomberg.net.

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