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PrintChina's steel prices have fallen by more than 1,000 yuan per ton from June peaks and the downward momentum seems will not stop in the near future.
Analysts say steelmaking industry is unlikely to improve performances in the fourth quarter of the year. More pessimistic forecasts go that overcapacity of the industry is emerging.
Traditional macroeconomic wisdom holds that steelmaking industry usually spearheads the turning point of a changing economy and once the point appears, the correction will last for about one year or even longer.
The correction has come to China's steelmakers.
Demands of the downstream users of steel industry mostly have slowed down and profit margins get narrower since this June.
Consequently, steel prices are unlikely to reverse its current falls and steel companies' performances are unlikely to improve in the fourth quarter, says analyst Zhang Ping of domestically leading Umetal.com.
Market experts are also pessimist on China's steel export in the foreseeable future and predict that a 2005 history in which 30 percent of the country's steelmakers lost money may repeat itself.
Steelmakers may choose to cut production to support prices and lower loss and this scenario is quite likely as the country's top steel producer Baosteel is mulling doing so.
But if major steelmakers like Baosteel succeed in stopping prices from falling, supply will increase as smaller producers may resume production as steel production re-becomes lucrative because of falling energy and fuel prices and hence increase pressures for steel prices to fall further.
Editor: Ivy
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