China's steelmakers face huge losses: industry group

Sluggish demand and rising production costs continued to sap the profits of China's steelmaking industry in the first half of the year, the China Iron and Steel Association (CISA) said Tuesday.

China's major steelmakers saw their profits drop sharply in the first six months, down 54.55 billion yuan (8.66 billion U.S. dollars), or 95.81 percent year on year, to a mere 2.39 billion yuan, according to Zhang Changfu, deputy head of the CISA.

Some 33.75 percent of major Chinese steelmakers reported losses in the first half of the year and the companies' sales profit margins dwindled to 0.13 percent from the 3.06-percent ratio logged in the same period last year, according to Zhang.

After factoring out returns on investment, the industry was virtually mired in losses, Zhang said.

Meanwhile, fixed asset investment in the sector continued to climb during the period, up 12.05 percent year on year to 291.1 billion yuan, although the growth was 4.8 percentage points than that of a year earlier.

Zhang attributed the struggle to weak demand brought about by slowing growth worldwide and increasing production costs, including higher raw material prices and financing pressure.

He stressed the urgency of transforming the industry's development model and asked companies to be prepared for coming challenges.