By Anil Mathews (ScrapMonster Author)
November 03, 2015 01:45:28 AM
Chinese steelmakers recorded huge losses during the initial three quarters of 2015, says official data released by the China Iron and Steel Association (CISA).Steelmakers record colossal losses during first nine months: CISA
BEIJING (Scrap Monster): Major Chinese steel facilities have recorded net losses during the first three quarters of the year. The latest data released by the China Iron and Steel Association (CISA) indicates that listed Chinese iron and steel companies plunged to heavy losses during the nine-month period, mainly on the back of lackluster demand, domestic economic slowdown, yuan depreciation and falling iron ore prices.
According to CISA figures, 23 out of the 35 listed steelmakers have reported losses during the nine-month period from January to September this year. The combined losses of 49 major steelmakers surged higher significantly by over 350% year-on-year to CNY 450.42 billion. Diversification into non-steel businesses helped to reduce the overall losses of the total 101 companies to CNY 55.27 billion.
SGIS Songshan Co Ltd in Guangdong suffered biggest loss of 1.6 billion yuan. Also, Anshan Iron and Steel Group Corp reported losses of 888 million yiuan as compared with profit of 923 million yuan during the corresponding nine-month period last year. On the other hand, Baosteel reported net profit of 2.25 billion yuan during the initial three quarters in 2015. However, the company’s profits have plunged by 55% over the previous year. Incidentally, special steel companies managed to report profits. For instance, Yongxing Special Stainless Steel Co Ltd expects a profit in excess of 200 million yuan during the nine-month period.
It must be noted that the 150 member companies of CISA had reported profits during the first half of the year. The companies started slipping to losses during the third quarter of the year. According to analysts, there are several reasons that led to heavy losses. Firstly, state-owned large enterprises, backed by bank loans, have continued production at higher levels, despite losses. This has led to overcapacity woes, leading to sharp decline in prices.