Chinese steel companies in June 2013 worked at a loss

According to the Chinese Association of Chugun and Steel (CISA), in June 2013, the total loss of 86 members of this organization amounted to $ 109 million (669 million yuan). In total, in the first half of 2013, CISA members received $ 294 billion (1 trillion 800 million yuan) profit, which is 0.94 percent higher than in the APPG -2012. At the same time, in the first half of 2013, 35 metallurgical enterprises in China were unprofitable, and the average level of profit from the sale of metal products was 0.13 percent of its cost.

"Despite the fact that in the aggregate of the sector a profit was made, the growth of production became much ahead of the increase in demand," said Zhang Changfu, Deputy Chairman of CISA in the comments.

As stated in the report of the Chinese Ministry of Industry and Information Technologies, the total leverse (the ratio of debt obligations to the value of assets) of the country's metallurgical enterprises from January to May 2013 approached 70 percent, which is 3 percent higher than the APPG-2012 indicator. At the same time, the total debt in five months since the beginning of the year increased by 6.5 percent and reached 3 trillion yuan.

Against the backdrop of a slowdown in China’s economy, the restoration of demand for metal rolling is not expected. In addition, despite the presence of 300 million tons of excess metallurgical capacities, in the first quarter of 2013 in China, 31 new missile defense systems of 38 million tons of steel per year were commissioned. Chinese metallurgical companies support the growth of steel production due to fears to lose a share in the market and under the threat of reducing credit injections by banks.