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People's Daily Online>>China Business

Major steel makers report rise in March net profits

By Liang Fei  (Global Times)

08:12, April 19, 2012

China's major steel makers reported an increase in net profits in March, with 80 surveyed steel makers making a combined net profit of 2.08 billion yuan ($329.87 million) for the month, China Iron & Steel Association (CISA) said yesterday.

The 80 steel makers, accounting for over 80 percent of China's total steel production, reported combined losses of more than 2.8 billion yuan in the first two months, according to the CISA. In the first quarter, net losses came to over 800 million yuan compared with a profit of 25.8 billion yuan in the same period last year.

In the first two months, around 41.2 percent of companies in the industry suffered losses, but the percentage of loss-incurring companies dropped to some 33 percent in March, according to the CISA, indicating a temporary upturn in the industry.

Zhang Changfu, vice chairman of the association, said that the industry is expected to make a slight profit for the first half of this year, given that the second quarter has been a traditional peak season for the industry.

"Starting last month, construction had gradually picked up, which could mean a temporary rebound in steel demand," Wang Guoqing, a senior analyst with Beijing Lange Steel Information Research Center, told the Global Times yesterday.

Wang noted that the average price of steel products increased by about 2 percent month-on-month in March.

Some steel production also went toward rising exports, with net growth in steel exports accounting for 62.82 percent of total steel production growth in the first quarter. Statistics from the CISA show that China exported 12.15 million tons of steel products in the first three months this year, up 15.8 percent year-on-year.

Experts said that iron ore prices will not add to steel makers' cost pressure this year, with the current worldwide supply of iron ore outgrowing demand.

However, experts warned that despite a moderate growth in domestic and overseas demand, most steel makers will still face tough times.

"Companies should not be over-optimistic... If steel production continues to rise and overseas markets do not show significant growth, it will cause great pressure for the domestic industry," Zhang noted.

Daily steel production surged to 1.98 million tons in March, equal to 725 million tons of annual production, but China only consumed 661 million tons of steel products in 2011.


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