International Steel Mills
December 8, 2013
China Steel Industry in “Indiscriminate Self Destruction” Mode
Written by John Packard
In the first half of 2013 the profit on one ton of steel sold in China was only 0.43 Yuan. At that rate, it took the sale of two tons to earn just enough money to buy an ice cream bar or Popsicle. A far cry from peak profits of 1000 Yuan per ton. The Chinese steel industry has slipped from “self-esteemed and rich” to “self-depreciated and poor” over the last several years.
Overcapacity is one of the main culprits in the difficulties facing steelmakers. In 2009, Chinese steel capacity was about 700 million tons but by 2013 it had soared to 976 million tons. Oversupply led to a downward spiral of pricing and profit.
