Hu Jie is feeling the pinch of the recent slump in steel prices.

"The price drop is affecting our business," Hu, marketing manager of Van Shung Chong Holdings Limited, a steel trader and producer based in Shanghai, said on the sidelines of a steel forum yesterday.

"Since 2004, the steel market has been fluctuating violently," he said. "Now the trading price is even lower than the factory price."

After a month-long surge between April and May, China's steel prices plummeted suddenly.

In the last trading week of June, the prices of all types of steel products dropped between 100 to 200 yuan (US$12-24) a metric ton over the previous week in Shanghai, a barometer of the country's steel industry.

Within two weeks the rebar price declined from 4,200 yuan (US$525) to 3,900 yuan (US$487) per metric ton and the price of another construction material, wire rod, dropped from 4,500 yuan (US$562) to 3,800 yuan (US$475) per metric ton in Shanghai.

The price drop has permeated all corners of the country, including the northeast.

Wang Gang, chairman of a steel trader based in Shenyang, capital of Liaoning Province, told China Daily he had lost nearly 10 million yuan (US$1.25 million) in just a few days.

In the first half of the year, the steel industry recorded robust growth, hitting its peak in early June.

The beginning of a new year and upbeat anticipation of the market drove up prices, Huang Jin'gan, general director of the China Iron & Steel Association, said at the forum.

He also attributed the price fluctuation to the excessive number of steel traders, saying their unsteady sentiment unwittingly upset prices.

"The ratio of direct sale has been too low," Huang said. "And there are too many intermediaries."

He said the steel prices had grown too fast to be reasonable.

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