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China steel industry outlook bleak, Baosteel president

Date:15/04/2014   View: 958   Tags: China steel industry; Outlook
China’s steel makers will face a tough future, and more mills will be forced to close over the next three years due to tighter credit, higher environmental requirements and increasing margin pressure, said Dai Zhihao, president of Baoshan Iron &amp; Steel (Baosteel).<br /> <br /> Chinese steelmakers are facing their toughest period since the global financial crisis as they battle sluggish demand growth, massive output surpluses, and mounting environmental protection costs as Beijing pushes to restructure its bloated industries.<br /> <br /> The government has decided to consolidate ill-regulated industrial sectors and improve air quality by cracking down on outdated and polluting mills.<br /> <br /> The steel industry will continue to operate with tiny profit, with no big improvement in sight in 2014, yet steel demand is expected to increase slightly with the advancing of industrialization and urbanization, Mr. Dai said.<br /> <br /> But he also commented that enterprises with social responsibilities, environmental investment and advanced products technology would have development chances amid increasing attention on environmental protection and fiercer competition.<br /> <br /> Tightening lending may leave many heavily-indebted smaller private steel firms exposed to defaults. Some steel mills were told by banks that their 2014 credit limit would be 20% below the amount they borrowed last year.<br /> <br /> Baosteel's net profit for 2013 was 5.82 billion yuan ($936.75 million), a slump of 42% from the previous year, and its sales income occupied 5.15% of the steel industry’s (large and medium-size enterprises) total, according to its annual report released recently.<br /> <br /> <p> Baosteel planned to build three bases in Shanghai, Meishan and Zhanjiang to improve its output capacity. Mr. Dai revealed that Baosteel had finished the initial project design and signed the purchasing contract of main equipment. The Zhanjiang project is expected to commence operation by September 2016. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140415/20140415153344_3468.jpg" alt="" /> </p>

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