Although China Iron and Steel Association (CISA) had warned of the expanding losses amid China steel industry in advance, the results published by National Bureau of Statistics embarrassed all Chinese steel mills.

Statistics data disclosed that China steel industry went through 97.5 percent year on year slump in the first four months of 2009, which showed a positive sign of industry recovery comparing with the 99.2 percent plunge in Q1 2009. Declining dropping rate should be attributed to profit increase of small steel mills instead of the extending losses in large and medium sized steel mills.

Data from CISA unveiled CNY5.179 billion losses amid 72 large and medium sized steel mills monitored by CISA in the first four months of 2009 (39.73 percent steel mills ran into losses), compared with CNY63.401 billion profit in the corresponding period last year.

In Q1 2009, large and medium sized steel mills witnessed CNY3.308 billion loss, the losses of the first two months were CNY1.511 billion respectively, March CNY1.797 billion, April CNY1.871 billion, monthly loss is on the rise, indicating a deteriorating operation of large and medium sized steel mills.

On contrary, small steel mills, got into loss in H2 2008, benefited from the 4 trillion yuan stimulus package, longs producers gained great profits, while flats manufacturers post huge losses.

Despite of overwhelming losses of large and medium sized steel mills, Chinese steel enterprises did not cutback production. Data from National Bureau of Statistics showed that crude steel production of the first four months (170 million tons) annualized 519 million tons in 2009, a significant oversupply.

Crude steel output might possibly expand in May, in the first ten days of May, daily crude steel output annualized 537 million tons of the whole year, a historical high.

Tags: Steel