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2010 was a really tough year for Chinese steelmakers due to high input cost

China Iron and Steel Association announced recently that Chinese crude steel production in 2010 increased by 9.26%, over 600 million tonnes with steel price up 15.79%, but sales profitability was only 2.91%, far lower than average level of national industries.

It said “Chinese steel industry witnessed capacity and price increase but low profits due to high input costs.”

It said “Market share of domestic steel in domestic market kept rising in 2010. Production capacity of key products like auto, pipeline, silicon, ship plate and rail steel increased rapidly with higher quality. 18 of 22 types of steel products took up 95% of market share.”

CISA said “Industrial concentration of steel industry improved, with top ten steel mills produced 300 million tonnes of crude steel, taking up 48.43% of national crude steel production up by 3.41% compared with 45.02% of that in 2009.”

It added that though steel products structure optimized, problem of too high production volume still existed. It said “Large volume of production caused inventory increased severely with oversupply problem existed on domestic market. Crude steel production decreased since May in 2010 easing contradiction of supply and demand, but showing a rebound in November and December.”

Domestic steel price vibrated severely due to fluctuation of crude steel production. In overall, steel price edged up with an increase of 15.79%YoY.

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