Fitch: Price pressure for China steel

Fitch Ratings said it commented that even though it expects to see some consolidation within China's fragmented steel industry, mergers will likely do little to alleviate the price pressures on steel and the intense competition within the sector in 2010.

Steel prices are pushed down partly due to the increase in supply by small Chinese steel manufacturers, Fitch said, as they chase for market share when operating environment is sound.

Fitch said it expects the performance of the country's top three steel makers, namely Baoshan Iron & Steel Co., (rated A- and stable view), Angang Steel Co. Ltd. (rated BBB with stable view) and Wuhan Iron & Steel Co., (rated BBB- with stable view), to remain largely stable in 2010, despite the competitive operating environment.

The key product segments of these steel makers are auto steel products and cold-rolled steel products, which likely will be in tight supply after the strong demand growth last year, the agency said.

Given China's robust development, the agency said it believes the demand for fuel will remain high.

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