China Securities Journal cited Mr Luo Bingsheng vice chairman of China Iron & Steel Association as saying that, Chinese steel mills suffered more losses in March compared with January and February due to the continuous capacity expansion and the weak demand.
Mr Luo told the newspaper in response to the myth that steel mills continue full rate operation despite losses that the overall industrial loss has not changed. He said that the sagging demand has yet to come to an end, with steel prices still lingering at low levels.
Mr Yang Siming president of Nanjing Iron & Steel Union Co Ltd said "It will be impossible to earn profit from key steel business this year owing to the massive overcapacity. Most steel mills suffered more or less losses in March, with big mills losing more.”
Mr Luo said the withering demand in global market, rising trade protectionism, changing exchange rate and the unfavorable export tax policies are the main difficulties confronting Chinese steel export. As a result, the vice chairman suggests related government bodies to adjust export taxes for hot rolled sheet/coil and rail steel to help increase shipment.
Mr Yang Siming believes the full rate operation in March also helped prop up raw materials prices like coking coal. And the president suggests CISA to organize price talks between steelmakers and coal giants to alleviate costs pressure. Meanwhile, He said the loosening credit climate also encouraged steel mills sticking to full rate production instead of output cuts. Costs for steelmaking in this Jan and February fell by CNY 234 per tonne or 9.42%.
Crude steel production in March rises to some 42.9 million tonnes or translating into annual output of some 510 million tonnes. While according to forecasts made in the steel revitalization plan, crude steel output in 2009 would fall 8% on year to 460 million tonnes and apparent consumption could fall 5% to 430 million tonnes.