SHANGHAI, June 25 -- China's steel prices are likely to continue to weaken in the third quarter, as the steel industry suffers from growing supply and ebbing demand, a senior official of Shaoguan Iron and Steel Group said on Friday.
"The steel industry has entered a long downturn. Some mills have already cut production in June," said Deng Yong, deputy head of the strategic development department.
"Steel prices are likely to keep falling in the next three or even five months. The biggest uncertainty comes from the property sector, and demand growth in other sectors is also slowing down."
Shaoguan Steel, a mid-sized steel mill, holds a 20-percent stake in Guangdong Steel Group, in which Baosteel Group holds the rest 80 percent stake.
Steel prices in China have softened in recent weeks on poor demand prospects in the domestic market, and as the government removed export rebates for some products.
"Steel mills are struggling -- they are either making only a tiny profit or are already in the red," Deng told an industry conference, adding that spot iron ore prices were not falling as sharply as steel prices.
SGIS Songshan Co Ltd (000717.SZ: Quote) is Shaoguan Steel's listed arm.