Following sharp declines over the fast few months, most traders expect steel prices in China to rally in October when domestic steelworks cut production.

    The latest round of sharp steel price fall in China started in mid-July, due mainly to excessive output capacities and serious imbalance in demand and supply. China's top steel maker Baosteel, for instance, in September announced to reduce the prices of most products for delivery in October and November by some 800 yuan perton.

    Under the dual pressures of high cost and sluggish sales, iron and steel makers in Hebei Province took the lead in cutting their production in August, and they were followed by large steelworks in other regions on a large scale in September. It is expected that more domestic steel makers will follow suit in October.

    Massive production reduction is expected to help lower the inventory level and ease the oversupply situation. Meanwhile, downstream buyers may also increase purchases on expectation of price rebound.

    Anyway, many market analysts believe that the expected price rebound may not last long, likely to be followed by corrections and further slide.