Wednesday, June 20, 2012

China's steel industry earnings down 49.5% (correction to previous post)

This morning's post on China's steel industry was referencing the wrong Bloomberg article (ht marbarak). We apologize for pointing readers in the wrong direction.

However the thesis that China's steel industry is struggling is indeed correct. Going directly to the source of this news, we quote from the National Development and Reform Commission (NDRC):
NDRC (translation): - The first four months, the steel industry to achieve a profit of 39.5 billion yuan, down 49.5 percent. Among them, the mining industry profit of 21.2 billion yuan, down 7.9 percent;, and iron and steel smelting and processing industry profit of 15.1 billion yuan, down 68.8 percent.
This is driven by margin pressures as steel prices declined.
NDRC (translation): - Steel prices have come down. In May, the composite index of the domestic market, steel prices an average of 118.76, down 2.76 points from last month, down 17.28 points. 6.5mm high cable, 20mm plate, 1.0mm cold rolled coils average price of 4237 yuan / ton and 4298 yuan / ton and 5105 yuan / ton, down 3.7%, 3.6% and 1.6%, down 14.5%, 15.1% and 9.5%.
Again, this points to slower demand, driven by falling infrastructure activity and investment.
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