From WCT:
Overcapacity, excess supply and sagging prices have taken Chinese steel companies from profit to loss in the first quarter, and the problems are set to get worse.
More than 45% of steel companies reported losses as growth hit an 18th month low of 7.4%. Total losses stood at 2.3 billion yuan (US$380 million) against almost 8 billion yuan (US$1.3 billion) of profits in the same period last year…
“The first quarter of 2014 was the most difficult quarter since the start of the century,” said CISA vice president Zhang Changfu at a press conference in Beijing. Seasonally low consumption means steel firms find themselves in the doldrums.
At the end of March, inventories amounted to 19.4 million tonnes, over 43.5% up on the start of the year, intensifying worries. Prices meanwhile have flagged.
The China Steel Price Index stood at 94.83 at end of March, down 11.28% year on year, and 1.7% from a month ago. The average transaction price fell 10.14% year on year.
Despite weak demand, output kept rising, though less quickly than a year ago. Crude steel output in the first quarter stood at 203 million tonnes, up 2.4%; output rose 5.3% to 2611 million tonnes. Total sales revenues stood at 869 billion yuan (US$138.9 billion), down 0.79% year on year.
