NORC TO Stablize Price,Not To Unveil Fresh Plicy Of Strict Macro-control Measure

It is said that, Steel enterprises running inthe red are increasing, and the profit isgreatly decreasing, which has influencedthe calm and smooth running of the country'seconomy.

"Synthetically considering the overseasand domestic factors, if there are no greatchanges in the policy and the market demand,the steel market will stop dropping and de-velop towards the good direction in the nexthalf year." Facing the situation that domesticsteel price is all the way dropping, Vice Sec-retary-general of China Iron & Steel Associa-tion Qi Xiangdong expressed full confidenceto the steel market trend of the next half year.And this confidence comes from the changeof policies and the impersonality judgementto the downstream needs.

Policy: Not to Unveil StrictMacro-control Measures

According to an insider in a steel factory,the durative price decrease of steel in domes-tic market has drawn the attention of the lead-ers in the State Council. The National Devel-opment and Reform Commission (NDRC)called together eight domestic steel enterprisesto a symposium in Beijing, to find out the op-erating situation of them after the country'smacro-control. It is said that, enterprises run-ning in the red are increasing, and the profit isgreatly decreasing, which has influenced thecalm and smooth running of the country'seconomy. Now, the effect of the macro-con-ccording to the survey done by theMinistry of Commerce, all rates ofconsumer trust about the food safetyis under 50%. On June 1st, when attending the"Sino-Europe Food Safety and Quality ControlSeminar". Xu Aijia, Deputy Director of Mar-ket Regulation Department of Ministry of Com-merce, Said that relevant government depart-ments will enact nine items of law about foodsafety to make sure that consumers can feel safewhen shopping and consuming.

Xu also said that the newly established Farm Produce Safety Lawis under examination now, and they are amending Food Hygiene Law,Industry Products Operative Licences Management Statute and LivePig Slaughter Management Statute. Food safety standard system, in-spection system and credit system is established and made perfect, andMarket Access Management Statute of Edible Farm Produce and Cir-culation Management Statute of Wines are also under discussion.

In order to snengthen the construction of"three green" project of stan-dard system, Ministry of Commerce is quickening the steps to establish andissue standards like Ranking Requirements for Aptitude of Slaughter Com-trol is evident, and in order to keep thegood development momentum of therational econnomy, there will be nomore strict macro-control policies, buthe ongoing control policy shall stillbe strictly performed.

Since this year, the country has establishedseveral macro-control measures aiming at thesteel industry: abolishing the export drawbackof steel ingot and the billet on April lst; low-

ering the export drawback of rolled steel from13% to 11% on May lst; listing the iron ore,pig iron, scrap steel, billet and steel ingot asfie forbidden processing trade goods.

Demand: Steel Consuming Needsgrowing Strongly

Since April, there has been a great reverseof the domestic steel price after the pastmonths's increase. Especially the price of thescrew thread steel and the wire, their averageprice has gone down by more than 1000 RMB,and the momentum of decrease has not shownsigns of stop. Qi said, the increasing price ofraw material and the decreasing steel price hasled the steel enterprises into a dangerous situa-tion that 90% of the steel companies has higherproduction cost than the selling steel price.

With regard to the trend of the steel price,Qi has confidence in its rebound. This kind ofconfidence first comes from the affirmation ofthe effective demand on steel. According to thepublic data revealed by NDRC, from this Janu-ary to April, investment on real estate increases25.7%, production of civilian steel ships in-creases 65.8%, motor vehicle increases 41.8%,equipment for generating electricity increases52.3%, and the home appliances has also main-tained a rapid growth. Those industries all havegreat steel consuming needs.

Qi said, not only in China, the decreasingsteel price in international market will comeback to a reasonable stage in July or August.The Europe and the US are trying to digest theoverfull storage, and the overfull storage is alsothe main reason of the drop of the steel price.The rebound of the international price will bringalong some changes to the domestic market.

However, not all the people have an opti-mistic attitude to the trend of the steel price.Xu Qiang, manager of the Minmetals SteelCo. Ltd., said that the effect of the macro-con-trol will further emerge, and the import andexport structure will sure to change due to theimplement of the macro-control policy. Thepressure on the domestic steel market may beheavier, and the steel price may still be fluctu-ating. But this is a good chance for steel com-panies to swiften their changes on productstructure according to the export policy, toproduce more substitutes for import productsand to form a new balance of offers and needs.