It is reported that steel prices in China have dropped for six weeks running weighed by high stocks, but the decline was small thanks to the support from the recovering economy.

Market analysts hold that as the economy is growing steadily after a period of rapid revival. The steel industry will not go through sharp ups and downs, but is likely to enter a correction stage.

By last week, domestic steel prices had dipped for six straight weeks. However, the decline in the past three weeks has been narrowing, with rebar prices only edging down 10 yuan/ton a week on average.

Analysis of the industry information provider MySteel.com said that the building steel prices went down about 50 yuan/ton at most last week, with the decline smaller than the previous week.

However, a total of 13 rebar enterprises and 15 wire rod firms adjusted their prices last week, which indicates that the steel market has not yet stabilized.

Medium steel plate prices have been dropping but will post a smaller decline in the immediate future. The prices of hot-rolled and cold-rolled steel products will continue to correct.

According to a survey on the domestic steel mills and traders, more than a half held that the steel market would be dominated by correction in the coming period.

The Shanghai building steel market recorded an increase in stocks by 10 weeks running. A report by the China Iron and Steel Association said that in August, the steel stocks in the country’s major markets increased more than 15 percent over the previous month, and hit the second highest point of the year.

However, increasing steel demand from construction projects and restocking before the coming weeklong holiday have lent some support to the steel market.

Wang Jianhua, an analyst with MySteel, noted that the high stocks and a stable demand would exert a combined effect on the steel market.

Meanwhile, although steel prices have been falling persistently, steel plants are still unwilling to cut output as they can still make moderate profits at the current prices.

In the first 10 days of September, China’s crude steel output was estimated to be about 16.66 million tons. Daily output was about 1.66 million tons, down only 20,000 tons from last month.