Bloomberg News

China Steelmakers Poised for Rebound, Xinhua Says, Citing CISA

November 25, 2012

China’s steel industry, the world’s largest, will face better operating conditions this quarter and next year after posting nine months of losses, the official Xinhua News Agency reported, citing a trade association.

Most large- and medium-sized mills reversed losses last month, Xinhua said, citing Liu Zhenjiang, vice president of the China Iron & Steel Association, at an industry forum yesterday. Mills lost 5.5 billion yuan ($883 million) between January and September, compared with profit of 38.7 billion yuan in the same period of 2011, Xinhua reported, citing association data.

Liu’s comments add to signs that China’s economy, the world’s second largest, may be stabilizing after a seven-quarter slowdown that curbed growth to 7.4 percent in the three months ended September. Steel producers’ earnings may improve in the last three months of 2012 on rising prices of the alloy and better raw-material costs, Mirae Securities (037620) Co. said on Oct. 25.

China needs to maintain strict controls over steel- production capacity, Liu was cited as saying. This year had been the hardest for the country’s mills since the turn of the century, the report said, citing Liu.

Economic growth may rebound to 7.7 percent in the final three months of this year, according to the median of analysts’ estimates surveyed by Bloomberg. A further acceleration is predicted in the first two quarters of next year, the data show.

Total crude-steel output in China rose 2 percent to 59.1 million metric tons in October from September, the National Bureau of Statistics said Nov. 13. Compared with a year earlier, output rose 6 percent, it said, without giving a figure.

Higher Prices

Baoshan Iron (600019) & Steel Co., the nation’s biggest publicly traded mill, said on Nov. 12 that it would raise prices for most cold-rolled products for December delivery in the first increase in three months. Baoshan Iron shares have declined 7.6 percent over the past year.

China’s government approved a $158 billion subways-to-roads construction plan in September. While the infrastructure program will boost steel demand in the final quarter, mill overcapacity may limit gains in steel prices, the association said on Nov. 14.

Industrial production in China rose 9.6 percent in October from a year earlier, the government reported on Nov. 9. A preliminary manufacturing index reading for November signaled the first expansion in 13 months, according to data from HSBC Holdings Plc and Markit Economics on Nov. 22.

To contact the reporter on this story: Liza Lin in Shanghai at llin15@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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