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PrintSHANGHAI, Nov 20 (Reuters) - China's Baoshan Iron and Steel Co Ltd has cut its sales prices for cold-rolled steel products for December by a further 970 yuan ($142) per tonne, trade sources said on Thursday.
Baosteel, the listed unit of the country's largest steel maker, had already lowered its offer prices twice since it released its fourth-quarter base sales prices, as the demand outlook weakened in China.
The aggressive price cut, mirroring China's sluggish steel market, marks the first time the company has adjusted its monthly price.
"They are selling steel for peanuts," a Shanghai-based trader said, noting that Baosteel's output now cost roughly the same as Shanghai cabbages, on a weight-for-weight basis.
Local cabbages fetch as much as 1.5 yuan for 500 grams, or 3,000 yuan per tonne.
After the cut, Baosteel's cold-rolled steel prices will be 3,526 yuan per tonne, while its hot-rolled steel prices remain unchanged at 2,942 yuan a tonne from the previous established December offers. Both the prices exclude a 17 percent value-added tax.
Baosteel also cut the prices of galvanised steel product for December sales by a further 1,000 yuan a tonne, trade sources said, citing the statement from the company's sales department.
Baosteel, furthermore, provided subsides of 1,000 yuan a tonne for the cold-rolled and galvanised products its customers ordered at the October and November price levels, the sources said.
NO PREMIUM
Baosteel, which competes with Nippon Steel Corp and South Korea's POSCO to supply the world's biggest steel market, expected losses on its carbon and stainless steel products in the fourth quarter of this year due to slumping prices.
The company's hot-rolled steel products currently carry no premium to the Chinese domestic market, while its cold-rolled steel products sell at a premium of 200 yuan a tonne, Helen Lau, analyst at Daiwa Securities, said in a note.
Previously, Baosteel's products were rewarded with a premium of at least 1,000 yuan a tonne compared with those of other Chinese mills, due to its well-recognised high quality.
"We forecast Baosteel hot-rolled steel prices to decline by 10 percent year-on-year in 2009," Lau said, adding that she expected market steel prices to teeter at the brink of break-even point for an extended period until the end of the first quarter next year, when demand recovery is widely expected. ($1=6.832 Yuan)
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