Luo Tiejun, deputy minister at China's Ministry of Industry and Information Technology (MIIT), has disclosed that in the current year the average profit margin of Chinese domestic industry is estimated to be six percent, with the average profit margin of producers in the country's steel industry at just 3.5 percent. The deputy minister said that, in line with increasing iron ore prices and oversupply, the domestic steel industry has entered a phase of low profitability.
Mr. Luo went on to state that China's steel enterprises have started to turn to new business fields, including real estate, machinery equipment and finance, in the context of low profitability. He said that Chinese steel giant Baosteel Group, for instance, has taken the initiative in developing its non-steel business. It is estimated that Baosteel's gross profit from its non-steel business will account for one sixth of its total gross profit in the whole of 2010.