Steel mills encouraged to curb production
By Richard Fu |
August 1, 2012, Wednesday
|
Print Edition
Print Edition
CHINA'S steel association has urged small mills to curb production to ease oversupply in an industry that's struggling to remain profitable.
The nation's crude steel output rose 1.8 percent to 357 million tons in the first half of this year, the China Iron and Steel Association said yesterday. Of this, output by the association's members fell 0.1 percent while that by non-members, mostly small local mills, rose 12.9 percent.
"Some mills are engaging in loss-making production to maintain market share," said Zhang Changfu, vice chairman of the association, which is funded by major steel companies.
Major steel companies posted a combined profit of 2.39 billion yuan (US$375 million) in the first half, down 96 percent from a year earlier, the association said. Mills lost money on their steel operations after excluding investment returns in other areas, it said.
A slowing economy has curbed steel demand in the property, railway, auto and shipbuilding industries while Europe's lingering debt crisis is also affecting exports.
Zhang warned its members that government stimulus measures could spur a rebound in steel production in the second half, which could result in higher inventories, erasing all the achievements made in the first half.
Falling prices and high production costs cut profit margins at mills to 0.13 percent from 3.06 percent a year earlier, the association said.
The nation's crude steel output rose 1.8 percent to 357 million tons in the first half of this year, the China Iron and Steel Association said yesterday. Of this, output by the association's members fell 0.1 percent while that by non-members, mostly small local mills, rose 12.9 percent.
"Some mills are engaging in loss-making production to maintain market share," said Zhang Changfu, vice chairman of the association, which is funded by major steel companies.
Major steel companies posted a combined profit of 2.39 billion yuan (US$375 million) in the first half, down 96 percent from a year earlier, the association said. Mills lost money on their steel operations after excluding investment returns in other areas, it said.
A slowing economy has curbed steel demand in the property, railway, auto and shipbuilding industries while Europe's lingering debt crisis is also affecting exports.
Zhang warned its members that government stimulus measures could spur a rebound in steel production in the second half, which could result in higher inventories, erasing all the achievements made in the first half.
Falling prices and high production costs cut profit margins at mills to 0.13 percent from 3.06 percent a year earlier, the association said.
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