A worker at a steel factory in Dalian, Northeast China's Liaoning province, Sept 1, 2016. (Photo/China Daily)
China has so far achieved more than 80 percent of its capacity reduction goal for this year in the steel and coal industries, the Ministry of Industry and Information Technology revealed on Thursday.
Huang Libin, deputy director of the operation and supervision coordination department of the ministry, told a news conference that the steel industry has registered profits as steel prices rise and outdated capacity is reduced.
"Steel prices in mid-October increased by more than 30 percent compared with the beginning of the year. Members of the China Iron and Steel Association achieved profits in the first eight months of this year, which is a big turnaround from the net losses in the first eight months of last year," said Huang.
According to the CISA, the crude steel output of its 373 members fell 2.4 percent to 308 million tons in the first half of this year. Net profits in the first half of this year were 12.6 billion yuan ($1.87 billion), up 4.27 times from the same period last year.
Ansteel in Liaoning province registered net profits of 977 million yuan in the first three quarters, compared with net losses of 888 million yuan in the same period last year.
According to its earnings report, the profits are mainly due to the company's efforts in reducing costs in burning materials and operations.
The increase in steel prices has driven up profits in the industry, said Wang Guoqing, director of the Lange Steel Information Center.
"The losses last year forced a lot of plants to close. Consequently, demand outstripped supply by a large margin at the beginning of the year. Moreover, signs that the economy is warming up, such as the Hangzhou G20 Summit, have also driven up demand for steel," said Wang.
The coal sector also reported positive growth in profits in August, ending profit declines in the first seven months, Huang added.
