Hi PI,
Apart from the global meltdown at the moment, this article may help explain what's happening, note the last paragraph. I'm using the next few months (at least 6 I expect) to top up as more cash becomes available. Don't despair too much fellow Sundance shareholders, take note of the last paragraph, although in the short term it would appear that Sundance will be heading well below 10cents.
Chinese steelmakers set to slash output
By Patti Waldmeir in Shanghai
Published: October 6 2008 19:34 | Last updated: October 6 2008 19:34
Several of China’s largest steelmakers are expected to cut output by about 20 per cent this month in a bid to support falling steel prices at a time of weakening demand.
Steel mills in northern China, including Shougang Steel, Shandong Iron and Steel, Hebei Iron and Steel, and Angang Steel met last week to discuss cuts that could total 20m tonnes, according to the state-run Xinhua news agency.
Zhang Jing, a steel analyst at Steel Business Briefing, the consultancy, said the cuts could be even larger than those outlined by Xinhua. Ms Zhang said some steel mills in eastern China would also cut output steeply, though they may not announce that they were doing so.
Jing Ulrich, head of China equities at JPMorgan, said the cuts could prove “a turning point for China’s steel industry”.
“The sharp slowdown in the property market is having a severe impact on Chinese steel producers,” she said, noting that the property sector accounted for 38 per cent of steel industry demand. She quoted Xu Lejiang, the Baosteel chairman, as telling a recent industry conference that the era of rapid steel industry growth “will soon be remembered as history”.
Chinese steel consumption rose 16 per cent in the first half of 2008. Since then, the three main industries that consume steel in China – construction, household appliances and the car industry – have all shown signs of a slowdown, say industry sources.
Steel output across the industry had been falling slowly since June, even before the news of further steep cuts, said Zhou Xizeng, steel market analyst at Citic Securities, with some factories forced into a loss-making position by low prices. Crude steel output declined 5 per cent month on month in August, to 43m tonnes.
However, most analysts expect a recovery in demand in a few months, as government policy shifts focus from fighting inflation to supporting economic growth in the face of a global slowdown.
Copyright The Financial Times Limited 2008
Hope this explains it PI, All the best J
EDITOR’S CHOICE
Steel outlook falters as demand falls - Oct-02Lex: Chinese steel - Sep-30Chinese steel consumption set to fall - Sep-03Nymex to offer steel futures contract - Aug-04Steel price nearly doubles in year - Apr-27LME seeks profitable billet with steel contracts - Jan-15Shares of Angang Steel fell by their 10 per cent daily limit in Shanghai trading in response to the reports of output cuts.