Chinese School - Steel makers to suffer heavy losses

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Steel makers to suffer heavy losses

www.chinanews.cn 2005-03-25 13:25:27

Chinanews, Mar. 24 - Yesterday, 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. Meanwhile, 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, thereby
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.

          ��No end in sight for steel price hikes (2005-03-23)
          ��Steel price hikes impact 500 listed companies (2005-03-04)
          ��Steel prices to rise sharply in China (2005-03-02)

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