The falling steel price has begun to rebound after measures were taken, said Luo Bingsheng, executive vice-chairman of China Iron and Steel Industry Association (CISA) Monday in Beijing at a press briefing.

In late September, prices in the domestic steel products market plunged, with the price of hot-rolled plates and rolls even shedding by 50 percent in some places compared with its highest level this year.

"Such a phenomenon is abnormal," said Luo.

The new resource supply on the domestic market stood at 37.36 million tons in the first three quarters, up 18.6 percent year on year, while the domestic consumption grew 19.25 percent in the corresponding period, with the demand and supply basically coordinated. In such circumstances, it is abnormal to see a sharp steel price fall, he noted.

In addition, the domestic steel price movement went in the opposite direction of international market prices recently, which have been climbing in Europe and the United States.

As the largest steel product market in the world, the Chinese steel products market already has been integrated with the world market. The domestic steel price index has largely moved in pace with that of the international market since last year.

The association attributes the recent steel price plunge to multiple factors, such as general overcapacity in iron and steel production, a sharp increase of plate imports in the third quarter, speculation and panic selling.

On Oct. 21, the CISA called 50 major steel companies and they agreed to take measures to prevent the price from falling down.

First, pushing forward enterprise mergers and acquisitions to phase out backward capacities and prevent excessive capacity expansion;

Secondly, setting up an output-demand coordination group in the medium- and thick-plate and hot rolled wide belt, plate and roll fields on a voluntary basis of the enterprises to strengthen industrial self-discipline. Such coordination groups may be extended to other steel products if necessary.

Thirdly, requiring all members of the association, particularly plate and hot rolled wide belt makers, to control output and reduce their production in the fourth quarter by more than 5 percent so as to ease market pressure.

Fourthly, increasing direct supply and direct sales to reduce intermediate links and prevent speculation.

Last, requiring steel makers to refuse steel products futures trade so as to prevent the negative impact of forward contracts and other electronic transactions.

Source: Xinhua