KUALA LUMPUR: AmResearch said in an unprecedented move, the Chinese Government is implementing a series of power cuts across major industries, including the steel industry.

It said on Tuesday, Sept 14 that such a move forms part of China's concerted efforts to meet its energy-efficiency targets - and help pare China's steel supply by 9.6% for the rest of the year.

As things stand, latest data released by the National Bureau of Statistics indicated that China's crude steel production has already fallen 1.1% YoY in August to 51.6 million tonne - the first monthly drop in 2010.

AmResearch said more importantly, it reckons that China's continued efforts to crimp supply should set the stage for a stronger recovery in steel prices moving into 4Q10.

"Select Malaysian millers such as ANN JOO RESOURCES BHD [] (Ann Joo) are already repositioning themselves by stocking up its scrap supplies that would last at least until the year-end - ahead of an expected uptick in steel demand after the Ramadan break. We maintain our OVERWEIGHT stance on the steel sector," it said.