China's steel industry last year lost nearly 30 billion yuan

According to Sun Zhaohui, a member of the National Committee of the Chinese People's Political Consultative Conference and the deputy director of the State Key Laboratory of Comprehensive Utilization of Vanadium and Titanium Resources of Panzhihua Iron and Steel Co., Ltd., the Chinese steel industry is on the verge of loss due to the serious overcapacity of domestic steel production and the high price of imported iron ore to engulf the meager profits of steel companies. In 2012, the industry's loss amounted to 28.924 billion yuan, a year-on-year increase of 7.39 times.

The industry's losses are affected by multiple factors, including: China's economic growth rate decline, negative growth in steel use in some industries, shrinking market demand, insufficient demand in downstream industries, and falling steel prices. Sun Zhaohui specifically analyzed that the steel market is oversupply and demanding contradictions, and the steel production capacity is seriously overcapacity. “It is estimated that domestic crude steel production capacity will exceed 1 billion tons in 2013.”

In addition, Sun Zhaohui pointed out that the high price of imported iron ore has swallowed up the meager profits of the steel industry. In October last year, for example, the steel price index rose by only 2.9%, but the import price of imported iron ore increased by 15.9%. Iron and steel enterprises are generally in financially tight, difficult to finance, and expensive to finance. According to statistics, in 2012, the sales revenue of member companies of the Iron and Steel Association decreased by 4.31%, bank loans increased by 8.6%, and financial expenses increased by 24.29%.

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