Steel Takes a Tumble in China

Makers of steel in China have been able to keep their pricing healthy throughout 2009, although the last week in August produced a sizable downturn, according to a report from Reuters.

Spot pricing for hot-rolled coil in China dropped by 7.5 percent per metric ton during the week, according to data collected by Metal Bulletin and reported on by Reuters.

The next questions to be answered are whether China is oversupplied with steel and, if so, whether mills in that nation will begin cutting back on production—as well as cutting back on the iron ore and scrap that they purchase.

One analyst quoted by Reuters says demand fundamentals in China are still good, but that pricing may have been loftier than called for throughout much of 2009 because of speculation by investors.

Additionally, with China’s stock market having lost value in recent weeks, commodity values may be going along for an unfortunate ride whether or not the fundamentals dictate it, says the analyst.