Foundries forced to cut output

Steelmakers in China, the world's largest producer, will be forced to cut output in the next two months as prices continue to decline because of oversupply, Jiangsu Shagang Group Co said.

Prices may drop by between 5 and 10 percent for the rest of the year, Shagang Chairman Shen Wenrong said in an interview in Beijing. The Zhangjiagang-based steelmaker is the nation's fifth-largest mill and the biggest maker of steel wires and rods used in construction.

Steel prices in China have dropped 25 percent since reaching a 10-month high on Aug 4, as overproduction offset rising demand created by government spending. Wuhan Iron & Steel Group, China's third biggest, may carry out annual maintenance which will reduce output, Wuhan General Manager Deng Qilin said this week.