Profits of Chinese steelmakers shrink 40 percent in June compared to May

Tuesday, 27 July 2010 14:40:09 (GMT+2)

According to insiders at the China Iron and Steel Association (CISA), the 77 large- and medium-sized steelmakers in China reported an aggregate profit of RMB 6.25 billion ($0.923 billion) in June, down 40 percent on the figure of RMB 10.044 billion ($1.48 billion) recorded in May.

As indicated by the same source, in the first six months of the current year the aggregate profit of the 77 steelmakers in question came to RMB 50.718 billion ($7.49 billion), up 21.22 times year on year. However, the CISA officials said that the strong drop in June net profits compared to May indicates more difficult times for the domestic steel industry, adding that the situation may worsen in July and August. 

The CISA officials also pointed out that Chinese crude steel output has remained at high levels this year. Data from China's National Bureau of Statistics reveal that in May Chinese crude steel output was 56.143 million mt, up 20.7 percent year on year, while finished steel output was 71.218 million mt, up 23.6 percent year on year. From January to May, China's monthly crude steel output was consistently above 50 million mt. June output is expected to exceed 52 million mt. 

In addition, as the CISA officials remarked, China has adjusted its export rebate rate for steel production and this, along with international protectionism, has increased the difficulties facing China's steel exports. In early July, steel inventory in China reached 15.09 million mt, up 74 percent year on year. 

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