SHANGHAI/BEIJING, July 16 -- China steel prices extended declines this week, weighed down by August price cuts by big steelmakers, but analysts expect prices to hit bottom in mid-summer.
Construction steel prices in Shanghai fell to 3,580-3,600 yuan ($528.7-$528.7) per tonne on Thursday, down a further 2 percent from last week, industry consultancy Mysteel said.
Top Chinese steelmakers have led the decline by slashing prices for August delivery, helping to dampen bearish market sentiment.
China's second-largest steelmaker, Baosteel Group, said it would lower August prices for some hot-rolled and cold-rolled products by 300 yuan per tonne, although it would keep some products unchanged.
Wuhan Steel, the country's third-largest, also followed suit on the same day by cutting August prices by 300 yuan per tonne.
"The new price is more in line with spot market prices. This adjustment is more a lag reaction to the falling spot prices and the declining iron ore spot," said Su Aik Lim, an analyst with Fitch Ratings.
Benchmark rebar contract at the Shanghai Futures Exchange SRBF1 closed at 4,053 yuan per tonne on Thursday, down 1 percent from a week earlier. The market has traded in a straight downtrend this week.
Analysts and traders are expecting rebar prices to bottom in the middle of the summer season after falling sharply since the end of April.
"The domestic steel market is quite weak, and basically I could not find any good factors for prices to recover, but most traders are expecting a technical rebound after prices slumped for a long while," a trader in Shanghai said.
Rebar prices have dropped by 17 percent from the peak level in late April, when the Chinese government started taking tough measures to cool the housing market.
On Tuesday, the government said Chinese banks should keep credit curbs for multiple-home buyers to extend the clampdown on the property market.
"Prices may bottom out in the middle to the end of this quarter, and traders may come back to buy again when prices drop to 3,300 yuan per tonne and take positions, though I expect more downside," said Graeme Train, an analyst with Macquarie Commodities Research." ($1=6.771 Yuan)