Steel compamies see low profits in Jan-Sept

Updated: 2011-11-01 10:02

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BEIJING -- Steel companies made low profits in the first three quarters of this year, restricted by rising costs and decreased demand, an industrial group said Monday.

Profits for China's 77 major steel companies rose 27.7 percent year-on-year during the January-September period, but the growth largely came from the companies' mines, power plants and investments rather than steel business, the China Iron and Steel Association said in a report.

The companies' average rate of profit in selling steel products was only 2.99 percent in the period, significantly lower than that of the country's other sectors, it said.

As China's domestic tightening measures have impacted demand, the real estate and manufacturing sectors are experiencing slower growth this year, resulting in an excessive supply in the steel industry, it said.

Despite a 32-percent surge in investment in the first three quarters, the real estate sector showed signs of slowing down in September, while automobile production rose only 2.75 percent in the nine months and shipyards' orders dropped 42.8 percent, according to official statistics.

Meanwhile, China's import prices of iron ore reached $165.74 on a CIF (cost, insurance and freight) basis, up 35.35 percent over the the same period of last year.

The report said that the price rise forced Chinese steelmakers to pay an additional $21.99 billion, compared with a year ago. Prices of coal and electricity also increased, making steel companies' operation costs stubbornly high.

China produced 525.7 million metric tons of crude steel in the first three quarters, up 10.7 percent. Its pig iron output rose 10.4 percent to 485.5 million metric tons, while steel products grew 13.9 percent to 667.3 million metric tons.