Chinese steelmakers hit record profits in 2013

According to the China Steel and Steel Industry Association (CISA), China's total profit in 2013 jumped to 22.9 billion CNY, well above the meager 1.6 billion CNY of 2012. At the same time, the steel industry must prepare for long-term challenges in the face of skyrocketing material costs and overcapacity.

CISA statistics showed that total sales of medium and large steel enterprises in China expanded 3.9 percent to 3.7 trillion. CNY in 2013. Sixteen steel enterprises are still in the red, 10 have reduced profits compared to 2012, bearing a total loss of 11.8 billion CNY, down 63.91 percent.

CISA claims that some businesses managed to make a profit in the past year, mainly through government grants or asset disposals. Wuhan Iron and Steel, for example, made a profit of CNY 1.5 billion in 2013 from non-core businesses such as tires from china as his core business is still deep in the red.

Zhang Changfu, vice chairman and general secretary of CISA, said the surplus will continue to weaken steel prices until the government's industry regulation program bears fruit, which will take some time. The problem will be exacerbated by high production costs and a lack of funds from metallurgical enterprises. It may take at least three to five years before the above problems are resolved.