World Crisis Online

By CSC staff, Shanghai It took 17 weeks this year for the domestic steel price to increase from 3,000 yuan per ton to 5,000 yuan, but less than 2 weeks for it to drop from 5,000 yuan to below 4,000 yuan.

From April to early August, the prices of main steel products in the domestic market rose nearly 30% over the lowest level this year. As of last weekend, the benchmark steel price index (SH-CSPI) of Steel House (China) closed at 99.12 points, down 5.29% compared with the previous week, 22.51% from the same month last year, and 25.52% from last year.

According to a survey by steel information agency “My iron and steel,” concerning the domestic steel market trend this week (August 24 ~ August 28) for traders and steel mills in 15 major cities, the prices of deformed steel bars and hot-rolled products are mainly decreasing or adjusting.

The rising production capacity has been due to rapid price increases, which have made life very uncomfortable for downstream firms. In early August, the average daily crude steel output of large and medium-sized smelters nationwide reached 1.67 million tons, greater than July’s 1.63 million ton total, already a record high. At the moment, most of China’s steel mills are at or nearing full capacity.

Major aluminum manufacturers, on the other hand, have adopted a painful inventory reduction strategy in response to overcapacity while the government supports aluminum prices through purchasing and storage. Chinalco, China’s largest aluminum producer, is still looking at huge losses, however.

Chinalco’s half-year report states that, due to low prices for alumina, electrolytic aluminum, and aluminum, the company’s operating income was 27.985 billion yuan in the first half of 2009, off 29.44%, or 11.678 billion yuan, from the 39.663 billion yuan of the same period last year, and profit fell even more sharply. The first half losses to shareholders of the parent company reached