Demand for steel is collapsing at unprecedented speed says Head of China's Steel Association
The Deputy Head of China Iron & Steel Association, Zhu Jimin, warns that demand for steel is collapsing, along with prices, banks are tightening their lending, and losses are piling up. China's mills, which provide half the world's output, are battling against oversupply and dropping prices as local consumption falls for the first time in a generation amid a property-led slowdown.  Signs of corporate difficulties are escalating, with Angang Steel predicting losses for its third quarter, and Sinosteel failing to pay interest due on bonds maturing in 2017.  Analysts predict China's steel production may contract by a fifth if it continues down its present path.

If anyone were in any doubt about the magnitude of the crisis facing the world's largest steel industry, listening to Zhu Jimin would put them right.

Demand is collapsing along with prices, banks are tightening lending and losses are stacking up, the deputy head of the main steel mills' group said in China on Wednesday.

Weak demand for steel is putting pressure on iron ore prices Credit: Fairfax Media

"Production cuts are slower than the contraction in demand, therefore oversupply is worsening," said Zhu at a briefing by the China Iron & Steel Association (CISA).

"Although China has cut interest rates many times recently, steel mills said their funding costs have actually gone up."