Luo Bingsheng, deputy chairman of the China Iron and Steel Association (CISA) stated on May 29 in Shanghai that China's 77 large and medium size steelmakers recorded an aggregate profit of RMB 33.9 billion in the first four months of this year, marking a good performance compared to the same period last year.
Mr. Luo indicated that, although the domestic steel industry has successfully returned to profit, there are still many causes for concern. According to the CISA, in the first four months of this year, the average imported iron ore CIF price increased by 26.1 percent year on year, while large and medium size steelmakers' iron ore cost price for production only increased by 15.7 percent, which means that production mainly used low-priced inventory from last year. When this inventory is used up, domestic steelmakers will be forced to use high-priced iron ore imported after Q1 this year, and this will increase steel costs further.
Meanwhile, the outlook for China's steel exports is not great, Mr. Luo said. He stated that the World Steel Association anticipates that global apparent steel consumption will increase by 10.7 percent year on year in 2010, while in January-April this year global crude steel output increased by 31.8 percent year on year. In future, he said, competition in the international steel market will be more severe and it is very difficult to maintain a high rate of increase in exports.