People's Daily reported that the steel industry's profiting capability is facing more risks of getting injured despite somewhat eased cost pressure.
The paper cited an official from Angang Group as saying that "Growth of the industry has met an inflexion, the era for everybody makes money relying on strong demand and price rise is hard to reemerge; for now consolidation and structural upgrading need to be quickened to handle the global fluctuation and recession."
As disclosed by China Iron & Steel Association, the Chinese steel mills' production cost gained a staggering 60% in January to August, leading to a big loss making coverage in October after several months' price falling since July. An up to CNY 1.154 billion loss in January to September 18.06 times of last year's comparable figure, forced some small mills into closure or being acquired.
A leading official of the state-owned assets supervision and administration commission said that "So it's best timing to see elimination and selection in the steel industry. The market, as an invisible hand of power, is working."
In accordance with the guideline of the center government and industrial associations, several big-scale mergers have taken place, giving rise to Shandong Steel Group, Hebei Steel Group and giants in Guangdong and Guangxi etc. Calculated on the crude steel output of first half year, China's top ten steelmakers have accounted for 41.37% of the nation's total.