China’s Shougang Group has postponed the start-up of a new steel mill on the coast of northern China as steel prices plunged below the cost of production, an executive said.

The company’s Caofeidian mill, in Hebei province, was previously scheduled to start production on October 18 and no new date has been set, reports Reuters.
Shougang had permanently shut some old, polluting plants in Beijing and reduced operations at others as it built a state- of-the-art 10-million tonnes-per-year mill in Caofeidian.
The new plant will be more efficient and cut costs because it is near an iron ore port.
“From a technical and engineering point of view, the plant is basically ready to go. But there are other reasons, including market factors, that have forced the delay,” said Wang Zhongmin, president of Tangshan Caofeidian Industry and Development Co Ltd, which has developed the Caofeidian industrial zone.
“We would report 1,000 yuan losses for every tonne of steel output, so it’s better not to produce any at all,” a Shougang official was quoted by financial magazine Caijing as saying.
Domestic Chinese steel prices have fallen 37 per cent from their summer peak, driving down the spot price for raw material iron ore by 44 per cent, JP Morgan analyst Feng Zhang estimated in a report.
Meanwhile, China’s steel industry will seek a unified iron ore price from Brazilian, Australian and Indian miners in 2009 pricing negotiations, said Shan Shanghua, secretary general of the China Iron and Steel Association.