It is reported from China Securities Journal that large steel makers in China, including Taiyuan Iron and Steel, Baotou Iron and Steel, and Shougang Group, are expected to receive less contract demand in September than August, about 300,000 tons less.

Analysts with Umetal.com attributed the cut in orders mainly to steel price slump in August.

Earlier, Wuhan Iron and Steel, the parent company of Wugang Steel had cut its October prices by between 150 and 400 yuan/ton. But analysts say the company’s prices are still at a relatively high level, so the planned output of 1.1 to 1.2 million tons for September will be hard to achieve.

The Baosteel Group, the parent company of Baosteel, still has a number of August contracts to fulfill, so the company’s production in September will be only marginally influenced.

The Jiangsu Shagang Group is reported to be cutting or canceling margins so as to increase orders.

Anshan Steel and Maanshan Steel both have some production lines under overhaul, so their output is expected to decrease by 200,000 tons.

Meanwhile, many steel plants indicate that the agents only have to take up 60 to 80 percent of the specified quantity under terms of their agreements.

As statistics monitored by information provider MySteel.com show, steel stocks in 22 monitored major cities of China surged to 10.947 million tons in early September, up 53.6 percent from a year earlier.

The figure is close to the yearly peak of 10.96 million tons recorded in early March. Within this figure, stocks of building steels accounted for 5.442 million tons, 2.021 million tons more than the same period of last year and up 59 percent year on year, while steel sheets totaled 5.505 million tons, up 48.6 percent on year.

Even though steel products prices were falling, China’s crude steel output still hit a record high of 52.33 million tons in August. And the output from January to August totaled 370 million tons, up 5.2 percent year on year, according to the latest data released by the China National Bureau of Statistics.

A steel price slide signals a shrinkage in market demand. However, because there is still a profit margin, steel plants are still reluctant to take the initiative to cut production.

Xu Xiangchun, an analyst with MySteel.com said “None of the steel plants would like to cut output, but each hopes the others cut.”

As reported by China Securities Journal, steel plants in Hebei province, an important steel production base of China, have no intention to cut production at present.

“Our plant produced 217,100 tons of crude steel in August, the most on record. We are currently operating at full capacity, so the figure for September is expected to be above 200,000 tons,” an unidentified manager of a steel group at Handan, Hebei province, told China Securities Journal.

He also admitted that profit has dropped to between 200 and 300 yuan per ton after steel prices slumped by 700 to 800 yuan per ton.

“The stocks pile up because steel output greatly exceeds the demand. Although China’s crude steel output has only grown by a small margin over last year, the domestic market cannot digest so many products originally produced for export,” Xu Xiangchun noted.

China’s steel export has shrunk drastically this year because of the global economic recession. From this January to July, China exported crude steel of 1.86 million tons, while the figure for the same period of last year was 26.25 million tons.

“Under the slumping prices, traders and end-users are more prudent in purchasing steel products, which also caused the stock to rise,” said analyst Ma Zhongpu.

“The excessive output will lead steel prices to drop further, but by a much smaller margin than in August.” Said Xu.

In August, steel prices in China slumped by some 1,000 yuan per ton. Since September, the price drop of building steels and steel sheets has shrunk to between 100 and 250 yuan per ton. Yao Hong, president of Zenith Iron and Steel, expects the price slumps to continue until the end of September.

Earlier, China’s top steelmaker Baosteel has cut its October prices by between 200 and 500 yuan per ton, while Wugang has cut by between 300 and 400 yuan per ton. In comparison, Angang’s price cut range is wider and falls more in market expectation. On Friday, Angang cut its October prices by some 450 yuan per ton.

It is reported from China Business News (CBN) Monday that many buyers are taking the risk of smuggling rare earth from China, the largest rare earth exporter in the world, with the demand for rare earth increasing year by year.

An anonymous government official told the CBN that about 20,000 tonnes of rare earth was smuggled from China in 2008.

Customs statistics showed that last year the country exported 39,500 tonnes of rare earth oxide. That means smuggling accounted for one-third of the total volume of rare earth leaving China, the newspaper said.

The Ministry of Industry and Information Technology has been mulling plans to curb the smuggling of rare earth, according to an unnamed expert participated in the drafting of the “Rare-earth Industry Development Plan 2009-2015″. He said the authorities would introduce regulations and policies to punish rare-earth smuggling.

As we all know that the rare earth contains elements used in everything from agriculture to manufacturing.

It is said from Xiong Weiping, chairman of Chinalco, parent of Chalco, at the World Economic Forum concluded in the last weekend that about 20-30 percent of China’s aluminum production capacity is periodically in excess.

Production capacity of both alumina and electrolytic aluminum is surplus by between 20 to 30 percent in China, but the surplus is not caused by last year’s economic slowdown and decreased demand, Xiong noted.”It is periodical,” Xiong said, “As Chinese economy recovers, and its urbanization and industrialization speed up, the country will definitely demand more base metals.”

Xiong is optimistic about the aluminum prices in the long run. “The aluminum industry is a sunrise industry. Aluminum will be widely used in energy saving, clean production, environmental protection and circular economy.”

But the short-term price trend still depends on whether China’s economy will come to real stabilization soon, according to Xiong.

Xiong negotiations with power generators for direct power supply will continue and there is still no exact timetable.

It is also said that the companies will stick to its policy of investing in rich resources and following the market closely, though Chinalco’s investment in Rio Tinto fell halfway.

According to the Ninth International Recyclable Metals Forum held Sunday, China’s secondary metals sector has developed rapidly and now ranks the top by its scale in the world.

Last year saw China utilized two million tons of secondary copper, ranking the top in the world and accounting for about 30 percent of the domestic consumption. In the meantime, it utilized about three million tons of reclaimed aluminum and one million tons of reclaimed lead, respectively making up 20 percent and 25 percent of the total domestic consumption.

China is a large consumer of major metals such as copper, aluminum, lead, and zinc. However, its domestic metals resources can hardly meet its increasing demand. Therefore, it must resort to renewable resources to reduce dependence on mineral resources.

Since last year, the international financial crisis has exerted severe impact on China’s secondary metals sector. To cushion the blow, China has strengthened its support to metals recycling economy.

Currently, the domestic backbone enterprises for the secondary copper have resumed production in succession. The leading companies for the secondary aluminum and lead have also got their production and operation stabilized. Meanwhile, some competitive metals producing enterprises start stepping into this field.

It is said from participants at an international forum concluded Monday in eastern China’s Jiangxi province that China is ahead of the world in the recycling of major non-ferrous metals and it was an area in which there had been rapid development.

This was part of China’s efforts to maintain sustainable economic growth, improve the efficient use of resources and lessen environmental pollution, they said.

The three-day forum on metals recycling was held in Fengcheng City.

In 2008 China ranked the first in the world in the consumption of recycled copper, using approximately 2 million tonnes, or 30 percent of its total annual copper consumption.

China also used 3 million tonnes of recycled aluminum, or 20 percent of its annual consumption; and nearly 1 million tonnes of recycled lead, 25 percent of consumption in 2008.

In terms of annual consumption of recycled aluminum and lead, China is placed by figures place the second in the world.

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