China's major steelmaker Angang will cut its main steel product prices for May bookings, traders said, in a move seen reflecting a short-term trend.
The company will drop hot-rolled coil prices by 200 yuan ($30.616) per ton and cold-rolled coil prices by 480 yuan per ton for May.
The stubbornly high inventories and tightening liquidity have spurred worries among traders, who expect steel mills to cut prices for May, despite anticipation of improving demand in the second quarter.
"Inventories haven't been absorbed enough so far, and a pick-up in demand is likely to slow as the government raised the reserve requirement ratio again," said a trader in Beijing.
China raised banks' required reserves on Sunday for the fourth time this year, extending the fight against excessive liquidity and stubbornly high inflation in the world's second-largest economy.
The reserve rate rise, which followed an increase in benchmark bank interest rates on April 5, was the seventh since China stepped up efforts against inflation in October and underscored the government's determination to keep the economy on an even keel.Chinese steel mills have ramped up production this year and produced 1.92 million tons of crude steel on daily basis, keeping near last month's record high.
Analysts expect steel production in China, which contributes almost half of the world's steel output, to remain high in April in response to strengthening steel prices since late March.
"Despite some encourage signs for the March data, we expect April steel production levels to rise to record or near-record levels," Steel Market Intelligence said in a research note.
Baoshan Iron & Steel Co Ltd, China's top listed steelmaker last week announced a reduction in its main product prices of 200-300 yuan per ton for May.
Wuhan Iron & Steel Co Ltd, China's third-largest steelmaker, kept prices of its main carbon steel products largely flat for May bookings, after cutting prices by 200 yuan per ton for April.
