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Steel makers to suffer heavy losses
(Chinanews.cn)
Updated: 2005-03-25 15:35
The State Information Center predicted in its report that due to the upcoming
71.5% price hike of imported iron ore in April, China's steel producers would
face increasing pressure to increase their prices. Small and medium-sized
companies would be the biggest victims.
According to this report, China's steel producers shoulder a total additional
cost of 20 billion to 30 billion yuan, accounting for 20% to 30% of the steel
industry's total profit. Small and medium-sized steel makers and other
steel-related enterprises such as machine, ship car and container manufacturers
would be in bigger risk of profit decline.
China currently has a vigorous demand for steel, particularly high quality
steel sheets. Domestic steel prices are still lower than those of the
international market. Therefore, several large producers with advanced
technologies are able to produce more top-grade goods and avoid big losses by
raising their steel prices, and successfully shifting the risks of cost hikes to
other steel-related enterprises. However, most of China's small and medium-sized
steel makers, weak in finance and risk management, mainly produce low-grade
steel for architectural use; they have to bear profit losses instead of shifting
the cost hikes to their customers.
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