Posted on 16 May 2016
China's Steel Industry Sees Profit Turnaround
China\'s bloated steel industry became profitable again in March, but the momentum is unlikely to sustain due to a persistent mismatch between supply and demand, Xinhua News Agency reported.
China\'s large and medium-sized steel producers recorded 2.7 billion yuan (US$1=6.514 yuan) profits in March, ending a 15-month losing streak.
It said the unexpected improvement was largely due to recovering steel prices on the back of a pick-up in infrastructure and property projects, and elevated speculation in the steel futures market.
However, analysts said the rebound would be unsustainable.
Steel makers have been in deep water over the past few years as a result of shrinking demand and excessive capacity built up during decades of rapid expansion.
"Steel demand only improved slightly. There is no strong rebound," Xinhua quoted Xu Xiangchun, an analyst with industry information provider mysteel.com, as saying.
He predicted steel prices to peak in April.
China\'s over-supplied steel sector experienced years of plunging prices and factory shutdowns due to the sluggish economy.
However, with encouragement from an upward trend in prices in March, many steel mills are resuming production, challenging government efforts to cut overcapacity in the industry.
Xinhua quoted Zhao Chenxin, a spokesperson with the National Development and Reform Commission (NDRC), as saying Thursday that the price surge would only mildly disturb the de-stocking efforts, and it would be short-lived.
