The domestic iron and steel industry began to turn a profit in July largely driven by the rebound of market demands and steel prices, but this may be hard to maintain in the fourth quarter as the cost of raw materials will increase, the Beijing-based Economic Information Daily reported Monday.
According to the financial data of 86 large domestic steel companies monitored by the China Iron and Steel Association (CISA), the sector made in July a net profit of 2.3 billion yuan ($376 million), compared to a combined 699 million yuan in losses in June.
Despite July's overall good performance, 21 steel firms, almost one-quarter of the monitored firms, suffered losses.
An unnamed source from CISA was quoted by the report as saying that the loss-making firms include Anshan Iron and Steel Group Corp, Magang (Group) Holding Co and Shandong Iron & Steel Group Co.
Though there were still 30 firms that lost money during the first seven months through July, the total amount of losses decreased to 11.9 billion yuan from 17.5 billion yuan over the same period of 2012, said the source.
The report attributed July's profits to the rise of steel prices amid controls on production and increased market demand.
China produced 65.5 million tons of crude steel in July, down 2.02 percent from June, which caused steel prices to continue rising since the beginning of July, according to the source.
However, iron ore prices will also rise due to increases in steel prices, resulting in high operating costs for steel companies, and making it difficult for firms to make a profit again in the fourth quarter, according to the report.
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