Shanghai Baosteel Group Corp, one of the largest steel manufacturers in China, will cut the July factory prices of its main products by as much as 400 yuan ($63) per ton.
It is the first time for the company to adjust its factory prices in the past three months.
According to the new price policy, the prices of hot-rolled steel and cold-rolled steel products will be lowered by 200 yuan per ton.
Other products will see price reductions between 100 yuan and 200 yuan per ton in July. Cold rolled non-grain oriented silicon steel will be the only product without price adjustment in July.
As a bellwether of the steel manufacturing industry, experts said the new round of price adjustment initiated by Baosteel will have a significant impact on the steel trading market in China and heat up market competition.
"Many companies will lower their factory prices accordingly, so it will be inevitably affect the profitability of weak players in the industry," said Yuan Zhibin, an analyst from CIC Consulting.
"As market demand is still weak, some small companies might lower their production volume or even stop operations to avoid future losses".
The market performance of steel companies was weak in the first few months of this year.
Figures from the China Iron and Steel Association show around one-third of large and medium-sized companies reported losses totaling 10.4 billion yuan in first four months of this year.