It is reported that Mr Wang Yifang, deputy to Chinese national people’s congress and GM of Hebei Iron and Steel in an interview said that there has been almost no profit for steel enterprises under current steel prices and prospects for iron ore pricing negotiations have been still uncertain this year.

 
Mr. Wang said steel prices have been volatile. He said “For example last year saw five sharp fluctuations in steel prices. Although current prices are relatively reasonable, comparing to prices of raw materials that purchased before enterprises have almost no profit margin. However if the prices rose to CNY 6000 per tonne, production costs of downstream industry chain would increase substantially causing significant adverse effects on downstream industries.”

 
He added that in addition to price fluctuation factor, the steel industry is currently facing another major problem overcapacity. He said “Capacity of Chinese steel industry is about 600 million tonnes while the actual demand is less than 500 million tonnes, so current surplus are around 100 million tons.”

 
He also said that Hebei Iron and Steel has been doing the work of elimination of backward production and the remained 10% backward production capacity will be eliminated this year.

 
(Sourced from www. steelprices-china.com)