China Securities Journal reported that as disclosed by the listed steelmakers" third quarter reports, the mills suffered a totaled loss of CNY 2.392 billion in the quarter specified, but a tougher time may be seen in the fourth quarter.
Mysteel analyst Mr Xu Xiangchun said the 32 listed steel companies registered a inventory value of CNY 246.342 billion in the third quarter which may shrink by 10% given sharp decrease in steel, iron ore and coke prices in October. That would be a loss of CNY 25 billion, indicating heavier pressure of asset impairment.
Currently, eight steelmakers reported over CNY 10 billion of stock, namely, Tanggang, Bengang, Taigang, WISCO, Baotou Steel, Angang, Baosteel and Masteel. Another 7 mills owned an inventory value of above CNY 5 billion. Among these, Baosteel, Angang, Nanjing Steel, Chongqing Steel, Pangang and Linyuan Steel reported a relatively large impairment of the assets, totaling CNY 2.36 billion 98.7% of the whole.
Mr Zhou Xizeng with CITIC Securities said "Their performance will be better if the steel price can firm up. The decrease has slowed in Nov, construction steel is moving up from some CNY 3300 per tonne to CNY 3600 per tonne all this is good. The problem is whether the prices can be stabilized. He said that the steel price not to slump in the fourth quarter as in Oct. It lacks the momentum to move down after rounds of declines resulted from falling demand and cost. As the panic fades, the real demand will emerge, but reducing stocks of the materials and finished products is still needed in Q4.
According to CISA data, 71 large and medium scaled steelmakers saw narrowed net margin to 1.4% in September from 4% in August, and had made losses in October.