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Profit drops 98% at steel association's member mills
By Richard Fu |
January 31, 2013, Thursday
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Online Edition
Online Edition
THE China Iron and Steel Association said profit of its member mills tumbled 98 percent last year as slowing demand and high costs squeezed margins.
Members of the industry group, which accounted for 82 percent of China's crude steel output last year, posted a combined profit of 1.58 billion yuan (US$253.9 million), the association said in a statement today.
Some major listed mills have issued earnings warnings, with Angang Steel Co late on Wednesday predicting a loss of 4.16 billion yuan for 2012, up from 2.15 billion yuan in 2011.
Baoshan Iron & Steel Co, China's largest listed steel maker, said earlier this month 2012 net profit may have risen 40 percent as gains from asset sales offset a decline in its core business. But without gains made from asset sales, Baosteel said its operating profit would have fallen 33 percent last year.
Still, the steel association said it expected a better market environment this year as demand is set to rise even though oversupply and high raw material costs will continue to be issues in the industry.
UBS analyst Hubert Tang said steel prices are likely to rise in the short term before falling later this year. Demand from the construction sector will help but demand from manufacturing may recover very slowly, he said.
Efforts by big mills to control output have also taken effect, the association said. Crude steel output by the association's members fell 0.6 percent to 589.1 million tons last year while that by the rest of the industry surged 24.8 percent to 127.5 million tons, it said.
Members of the industry group, which accounted for 82 percent of China's crude steel output last year, posted a combined profit of 1.58 billion yuan (US$253.9 million), the association said in a statement today.
Some major listed mills have issued earnings warnings, with Angang Steel Co late on Wednesday predicting a loss of 4.16 billion yuan for 2012, up from 2.15 billion yuan in 2011.
Baoshan Iron & Steel Co, China's largest listed steel maker, said earlier this month 2012 net profit may have risen 40 percent as gains from asset sales offset a decline in its core business. But without gains made from asset sales, Baosteel said its operating profit would have fallen 33 percent last year.
Still, the steel association said it expected a better market environment this year as demand is set to rise even though oversupply and high raw material costs will continue to be issues in the industry.
UBS analyst Hubert Tang said steel prices are likely to rise in the short term before falling later this year. Demand from the construction sector will help but demand from manufacturing may recover very slowly, he said.
Efforts by big mills to control output have also taken effect, the association said. Crude steel output by the association's members fell 0.6 percent to 589.1 million tons last year while that by the rest of the industry surged 24.8 percent to 127.5 million tons, it said.
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