China's domestic steel prices will remain volatile in the near future due to oversupply, Reuters reported Monday citing the China Iron & Steel Association (CISA).
It is expected that steel prices will continue to be volatile in the near future as there are many factors which will affect steel demand growth amid a difficult economic environment both at home and abroad, the report quoted CISA's website statement.
Domestic steel demand will continue picking up in September and in the fourth quarter thanks to the growing economy, Reuters quoted the statement.
Total inventories of five major steel products, fell by 0.3 percent, or 40,000 tons to 14.9 million tons in 26 major cities by end-August, said the report.
Chinese top steelmakers, including Baosteel Group Corporation and Wuhan Iron and Steel (Group) Corporation, have increased October product prices by 100-400 yuan ($14.9-59.6) per ton, according to Reuters.
But profit margins of large and medium-sized steel enterprises in the January-July period fell to 3.14 percent, 21st Century Business Herald reported earlier citing statistics from the CISA. Profit margin of large and medium-sized steel enterprises was 7.26 percent in 2007 and decreased to 3.23 percent in 2008 and 2.46 percent in 2009.
Iron ore prices fixed by the big three global miners - Vale, BHP Billiton and Rio Tinto - are expected to fall by 10 percent in the fourth quarter, according to estimates from major steel indexes.