Losses mounting for Chinese steelmakers

Nearly half of China’s steelmakers are losing money, which may be considered good news for ferrous scrap recyclers and steelmakers around the world who point to China’s steelmaking overcapacity as the cause of plummeting steel and scrap prices.

An online article from China Daily summarizing Chinese steel industry balance sheets says in the first 10 months of 2015, “Among [China’s] 101 large and medium-sized iron and steel smelters, 48, or 47.5 percent, are in the red.”

The 48 companies in the red combined to lose 14.8 billion yuan ($2.3 billion) in October 2015 alone after suffering even higher losses in September, according to the report.

After 10 months, crude steel production in China is down 2.2 percent compared with the first 10 months of 2014, according to trade association data. Consumption of steel has fallen even more sharply, leading to high finished steel inventories.

China’s Metallurgical Industry Planning and Research Institute (MPI) also announced in early December that it forecasts steel output in China will drop another 3.1 percent in 2016, down to 781 million metric tons for the year.