With the approaching of the iron ore negotiation, it becomes expecting whether domestic steel enterprises could break through the restrictions from international iron ore giants. What worries steel industry is that under the circumstances of global economic slowdown, high-costs and low downstream demands, the potential risks and difficulties in profit making become intensified in steel industry. Therefore, the reorganization and industrial concentration of has become a new focus in steel industry.
Statistic data from China Iron and Steel Association (CISA) showed that in Jan.-Aug., production costs of domestic steel enterprises soared 60pc, while domestic steel prices started plunging since July with demand decline continued. By October, over 60pc of large and medium steel enterprises were in profit losses, while the deficit had reached 1.154 billion Yuan in Jan.-Sept. this year, 18.06 times up over the same period last year. As the steel production capacity exceeds that of the demand, steel enterprises with poor management will be forced to shut down or restructured and only by the reorganization with enterprises that have secured resources, advanced technology and equipment and stable market could they get rid of the eliminated destiny.
An official from State-owned Assets Supervision and Administration Commission (SASCC) expressed the same opinion “The time for the survival of the fittest in steel industry has arrived. The reorganization by the government promoted little as steel industry was always in fine condition. But now the market will show its huge power.” From metalbiz.com
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