China Iron and Steel Association said that China’s medium and large iron and steel manufacturers are facing tough times this year and squeezed by market oversupply and increased production costs.

The report said the industry production costs have increased because of higher imported iron ore prices since the beginning of the year. During that period, the volume of iron ore China imported was 11.53 tonnes less than the same period the previous year but the cost of the ore was USD 19.2 billion more

For the entire steel industry, 77 large and medium iron and steel companies reported a combined profit of CNY 64 billion for the period an average profit margin of 2.8% well below the country average industry profit margin.

Some ten of the 77 firms posted combines losses of CNY 2.4 billion in the period.

CISA said China crude steel output in the first three quarters of the year increased 12.7% to 474.5 million tonnes and crude steel output a day in the nine month period averaged 1.7 million tonnes, equivalent to annual production of 634 million tonnes.

In the period, China was a net exporter of 22.5 million tonnes of crude steel. In the same period last year, it was a net importer of 1.4 million tonnes.

Inventory levels at China 78 large and medium sized iron and steel companies peaked in May at 10.5 million tonnes and had dropped to 9.8 million tonnes by the end of August. Steel inventory in the retail sector of 22 large and medium cities stood at 10.7 million tonnes at the end of August.

(Sourced from www.chinadaily.com.cn)