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China's steel industry in trouble: association

Updated: 2013-01-31 13:40
( Xinhua)

BEIJING - China's steel industry was confronted with its greatest difficulties in decades last year, as the global economic slowdown curtailed demand, an industry association said Thursday.

China's crude steel output grew 3.1 percent to 716.54 million tonnes in 2012, down 5.8 percentage points from a year earlier, the China Iron and Steel Association (CISA) said in a press release.

CISA said its member companies saw profits plummet 98.22 percent to 1.58 billion yuan (about $252 million) year on year.

The steel industry faced an extremely difficult situation in 2012, as an economic slowdown in China and the rest of the world curtailed market demand and resulted in flagging steel prices, the association said.

China's GDP grew 7.8 percent year on year to reach 51.93 trillion yuan last year, the slowest growth rate since 1999, according to the National Bureau of Statistics.

Slowing economic growth has decreased steel demand from downstream industries, such as the railway construction, property development and shipbuilding sectors, the association said.

Meanwhile, China's steel sector still has excessive production capacity, which has caused steel output to greatly exceed market demand.

As a result, steel producers competed fiercely to boost their sales, which in turn resulted in steel price decreases, the association said.

"The steel industry experienced its greatest difficulties since the beginning of the century," the association said.

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