BEIJING, March 18 Chinese steel prices fell to
their lowest level in more than eight years in mid-March as a
result of weak demand and a surge in output, the country's steel
association said in its monthly market report on Tuesday.
The China Iron and Steel Association (CISA) said that by the
second week of March, its China steel price index had fallen to
its lowest point since February 2006.
It said output had risen more quickly than expected in
February, leading to a glut on the market that has eaten away at
the prices of most major products.
"With steel demand increasing more slowly and steel
production maintaining a relatively rapid rate of growth, the
demand and supply imbalance is getting worse, which isn't
conducive to a recovery in prices," CISA said.
According to data from the National Bureau of Statistics,
China produced a record 2.22 million tonnes of crude steel a day
over the first two months of the year, despite weakness in
demand and financial problems at dozens of steel mills.
China's steel market, the world's biggest, has been in the
doldrums this year, and worries about potential debt defaults at
steel mills last week triggered the biggest daily drop in global
iron ore prices since 2009.
CISA said a seasonal improvement in the sector was already
evident, noting that steel product demand actually grew more
quickly than expected in early March, with non-steel mill
inventories in major cities, built up while prices were at their
eight-year low, already starting to fall.
However, it added that overall steel production remained too
high, and that prices were unlikely to recover sufficiently to
improve poor steel mill margins.
(Reporting by David Stanway; Editing by Kim Coghill)