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China steelmaking dilemma: Large production, low profitability

08-03-2011 09:43 BJT

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China's steel makers produced 350 million tons of crude steel in the first half of the year. But the larger production scale didn't come with larger profitability, due to rising production and financing costs.

According to data released by China Iron and Steel Association, the country's production of crude steel totaled 350 million tons in the first half of the year. That contributed to more than 57 percent of the global total.

But the impressively large production scale has failed to bring steel makers accordingly large profits. In the January to June period, the steel industry's average profit stood at around just 3 percent.

China's steel makers produced 350 million tons of crude steel in the first half of the year.

Zhang Changfu, Director General from China Iron & Steel Assoc. said, "Though our output figures look good, our average profit is just 3.14 percent. That makes our industry one of the least profitable ones."

Industry insiders say it's mainly due to soaring raw material prices.

Liu Xiang, director from Department of Finance, Shijiazhuang Iron & Steel said, "The increasing production capacity has pushed up demand for resources. This has lead to soaring prices and therefore operating costs are leveling our profits."

In addition to production costs, financing costs have risen by more than a third. Some steel makers have had to halt production to survive the difficult period.

China's steel makers produced 350 million tons of crude steel in the first half of the year.

Editor:Li Wanran |Source: CNTV.CN

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