SHANGHAI, Apr. 26 (SMM) – SMM sources report steel plants including Hebei Iron & Steel, Shasteel and Masteel began to bid for silicomanganese alloy. Despite silicomanganese alloy producers attempt to hold price firm, they lack negotiating power over pricing due to low consolidation rate and capacity surplus. SMM believes bidding prices by steel plants should be lowered significantly due to the sluggish steel market in April and pessimism in May.
On the steel market side, crude steel output continued to hit record highs. With the exception of 1% MoM decline in mid March, crude steel output has been rising after the Chinese New Year holiday. Daily average output in early April hit a record high of 2.12 million mt. Despite the reconstruction after the Lushan earthquake may boost demand for steel, Shasteel lowered rebar prices by RMB 80/mt on April 21st. State Information Center Economic Forecast Department Director Zhu Baoliang said steel plants will gain profits to expand production since iron ore prices fell in Q1. China’s economy is modestly improving, with GDP growth in Q2 expected to be around 8%, so growth of demand will unlikely help ease capacity surplus.