China Securities Journal cited Mr Luo Bingsheng deputy director of CISA as saying that domestic steel mills should step up efforts in arranging production, reducing costs, setting marketing strategy, working down inventories and improving internal productivity to realize a stable and healthy development for steel sector.

 

1. Steel mills should arrange their production according to market operations. In light of the current waning demand and falling export, they should control their total output and optimize product mix, trimming capacity moderately and sticking to the principle of idling operation when there are no orders in hand. Meanwhile, the progress of obsolete capacity elimination also should be accelerated to restore market balance.

 

2. Mills should further lower purchase costs, and increase revenue and reduce expenditure. It's better to realize swift production and sell process in a bid to minimize storage expenses, reaching balance of production and marketing and realizing profit growth.

 

3. Steel mills should regulate and maintain the normal steel sales procedure, avoiding vicious undersells and adhering to good faith. Stable ex-works price from mills will help stabilize market prices.

 

4. Stockpiles for 68 steel mills surveyed at the end of August add up to 9.49 million tonnes a massive increase of 47% from the year start. Therefore, mills should strictly put a brake on stock growth and keep it at a reasonable level, and exercise strict control over the increase of accounts payable and accounts receivable.

 

5. In response to the products deficit, mills should squeeze raw materials purchase prices and improve internal productivity to make up the deficits and get surpluses. Production suspension or cutback is necessary when sales price falls below that of manufacturing costs.

 

Editor:    Ivy

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