Party is over as China’s steel mills brace for hard times
Steelmakers likely to feel more pain unless China launches fresh stimulus measures, say analysts
Chinese steel producers ran up losses for the first time in three years in November as prices slid into a bear market on weak demand and near-record supply, ending years of solid profit margins. Traders and analysts say that as the world’s second-largest economy cools and it faces higher risk in a trade war with the US, its steelmakers are likely to feel more pain unless China launches fresh stimulus measures. With prices tumbling, Chinese mills, which make half the world’s steel, are reining in costs by returning to cheaper, low-grade raw material iron ore, in a boon for miners such as Australia’s Fortescue Metals Group. China’s steel production hit a record 82.55-million tons in October, but steel prices and margins have shrunk as China dialled back on winter output curbs aimed at cutting smog, while demand weakened as cold weather slows the construction sector. “Fat margins were caused by firm demand and tight supply, which is unsustainable in the long term,” said CRU analyst Ric...
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