China's major steelmaker Baoshan Iron & Steel expects steel prices to remain under pressure for the rest of this year as the industry shows no sign of reduction in output.
The company on Monday said “Steel prices will unlikely increase much in the second half of this year due to the oversupply. Prices are expected to stay at low levels,”, as it posted a 53-percent drop in first-half profit excluding one off items.
Steelmakers across the world have posted losses or sharp profit declines due in part to weakening demand in China, the largest steel consumer and a key source of growth at a time of economic chaos in Europe and the United States.
Shanghai rebar futures have fallen around 21 percent from this year's peak in April to 3,492 Yuan ($550) a tonne, the lowest since the launch of the contract in 2009.
Despite weak demand, Chinese steelmakers have maintained high output levels to maintain market share.The daily average crude steel output rose 1.1 percent to 1.970 million tonnes in early August compared from late July.
The slowdown in the world's No.2 economy has also hit global steelmakers including ArcelorMittal, Nippon Steel and POSCO.
Currently HRC of 3MM in China is being offered at $547 per MT.
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