China's steel industry's profits hit record high in 2007
By , 2008-03-08 02:23:46
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According to China Iron and Steel Association, China's iron and steel industry achieved record high profits in the past year despite rising iron ore prices. After tax profits from across the industry topped CNY 190 billion in 2007 a rise of 45% YoY as compared with 2006.
China Iron and Steel Association said that ¡°Even though most of domestic steel mills experienced a fruitful year, profit margins were heavily squeezed by rising high iron ore prices. The rising raw materials prices drove up product prices, resulting in China's steel product composite price index jumping by 113.49 points over the year up 8.16% from the previous year.¡±
The association said the average CIF iron ore price in Chinese ports for December 2007 was around USD 125.28 per tonne up by 81.83% YoY with a peak exceeding USD 190 per tonne. Steelmaking costs for Chinese steel mills' grew by 31.05%YoY in 2007. Expansion of Chinese steel production and increasing freight rates sent iron ore prices soaring to breath taking highs over the year, with the average domestic iron ore price growing 94.15% on an annual basis to CNY 1,179.25 per tonne in December 2007.
The growth was also influenced by increasing imported iron ore prices. In addition, other raw materials, including coal, coke and electricity, experienced price rises. As a result, domestic steelmakers saw their profit margins dropping to as low as 5.63% in December, 1.64% points lower than the year's average. Nonetheless, the CISA's figures show that over 2007, China consumed 518.83 million tonnes of steel products of which 501.96 million tonnes were domestically produced.
