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Steel production in China outpaces demand for 60 million tons
The Chinese steel sector has faced unexpected and most severe credit and financial realities for the post-industrial history. This was reported in the message by representatives of Baosteel, one of the largest domestic steel producers.
“A number of metallurgical plants that do not have significant competitive advantages will have to close soon,” said On Wenbo, chairman of Baosteel's board.
There are reports from major steel producers in China about significant consolidated losses, which amount to more than 2,3 billion yuan (that's about 367 million US dollars) in the first quarter only.
The financiers of the company Baosteel reported a decrease in net profit for the first months of this year by 7 percent - to one and a half billion yuan. At the same time, the ever-increasing excess steel production will further worsen the financial performance of the Chinese metallurgical sector for the next two to three years, the company said.
According to foreign experts and analysts of Baosteel itself, steel production in the Middle Kingdom will increase by almost four percent to 810 million tons by the end of the current year, significantly outpacing growth (and whether it is now) in demand, which is projected to be only 3,3 percent, to seven hundred and fifty million tons.
Baosteel believes that the average prices for ore in 2014 will drop and be below one hundred dollars per ton.