Chinese steelmakers report huge losses amid plunging prices and overcapacity

Mainland steelmakers reported huge losses this year, battered by plunging steel prices and massive market overcapacity as growth in economy slowed.

Angang Steel posted losses of 4.59 billion yuan (HK$5.49 billion) in 2015, a 600 per cent drop from the year before.

“In 2015, China experienced a slowdown in economic growth and excess steel capacity, which caused the domestic and overseas steel industry to enter an ‘Ice Age’ of severe challenges, fierce competition and difficult survival conditions,” Angang said in its annual results statement yesterday.

Baosteel, the second-largest steelmaker, saw a 82.5 per cent year-on-year slump in 2015 net profits to 1.01 billion yuan, while Chongqing Iron & Steel reported a net loss of almost 6 billion yuan. The Hong Kong and Shanghai-listed company had made a profit of 51 million yuan in 2014.

China, the world’s largest steel producer, accounts for almost half of global production, according to the World Steel Association.

It produced 804 million tonnes in 2015, almost eight times the output of Japan, the second-largest maker, and 20 times that of Germany.

The State Council, led by Premier Li Keqiang, said in January it would commit to slashing steel production by 100 to 150 million tonnes in the next few years to fight the extreme capacity glut, estimated at around 400 million tonnes. Some 500,000 workers in the industry are expected to lose their jobs in the downsizing.