Chinese steelmakers report lower profits in 1H 2019

Due to high prices for iron ore in the first half of 2019, production costs for Chinese metallurgists increased. The China Iron and Steel Industry Association said that while China's steel production rose 9.9% on an annualized basis to 492 million tonnes in the first half of the year, higher material costs were reflected in the sector's profits.

The total profit of the members of the China Iron and Steel Industry Association (CISA) was about 106.5 billion yuan (US $ 15.5 billion) in the first half of 2019, down 20.5% on the year. According to CISA, “Steel production rose 240 yuan ($ 35) per tonne in the first half of the year due to higher prices for imported iron ores.

CISA warns of rapid expansion of steel production without efficiency gains, which could trigger a resumption of oversupply in the sector.