It is said from its chairman on Friday that China’s top listed steel firm, Baoshan Iron and Steel Co Ltd or Baosteel, will consider mergers and acquisitions in the industry and look out for opportunities to invest abroad.

Xu Lejiang told reporters on the sidelines of a conference that there were not many opportunities for Baosteel to develop through building new production capacity.

Baosteel can only move forward by participating in M&As in the industry and through partnerships and was also looking abroad for opportunities.

It is reported from industry consultancy Umetal on Saturday that China’s Baoshan Iron and Steel Co Ltd (Baosteel) has cut prices for its major steel products by 9-13 percent for November sales versus the October tag.

Baosteel, the listed unit of China’s largest steelmaker, would cut the price of its major hot-rolled steel coil by 400 yuan ($58.61) per tonne, while reducing its major cold-rolled coil price by 700 yuan per tonne, Umetal said.

Baosteel’s price of the major hot-rolled steel coil would be 3,942 yuan a tonne for November, while the price of the company’s major cold-rolled steel coil would be 4,676 yuan a tonne, according to Reuters’ calculation.

It is said from analysts that steel prices in China still fall path after the National Holiday, and commercial stockpiles, especially that of sheet products, have increased by a large margin.

China’s top steel maker the Baosteel Group, the parent company of Baosteel (600019.SH), announced last Saturday to cut its November prices by 250 yuan to 500 yuan/ton, and to offer discounts on particular products in October.

According to Baosteel’s November pricing policy, prices of thick plates, ship plates and boiler container steel will be cut by 400 yuan to 500 yuan/ton; straight carbon hot-rolled products by 400 yuan/ton; machine use products by 400 yuan per ton; pickling products by 250 yuan/ton; hot-rolled galvanized zinc, electro galvanized zinc, color-coated sheets, and electric steel will be cut by between 300 and 400 yuan/ton. Meanwhile, the company will give compensation of 100 to 350 yuan/ton for ordering hot-rolled and cold-rolled products in October.

Although prices are falling, steel plants are reluctant to limit production proactively, because the up-stream fuel prices and hence their production costs are also dropping.

Currently, trading volumes are sluggish, as there is very much a wait-and-see atmosphere.

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.