China's Angang steel company logo. First quarter profit declines blamed on the high iron ore prices.A slow China's economy and margin kill iron ore prices probably caused a decline in demand for steel, said industry analyst recently.
With China's Central Government an economic slowdown for engineering infrastructure is also slowly, in theory, at least, and that means lower demand for said 27 steel, the China iron & steel Association April.
Wuhan steel agreed and also forecast a steel of demand say for 2011, that profit margins for steel makers when raw material and energy costs increase could be further undermined. Iron ore and transportation costs associated with higher energy prices, caused probably national steel consumption by at least 2.6% to 4.6% this year cool.
Industry - which reported said profits of more than 25% on average in the first quarter, according to the Shanghai daily - due to the hike in raw material prices and redundant capacity in medium-sized and smaller steel MühlenWuhan in a note would be the sector profit margins far lower than the average level of China's. The company added that the supply is maintained in the long term deficit of iron ore. That means that prices are unlikely.
Baosteel Group of Chairman Xu Lejiang said in a message published on the China iron & steel Association website, that the supply deficit of iron ore in fact earlier than expected, but vice versa can be if steel manufacturer kill demand due to the combination of a slower economy and high cost in fact slowed gains.
The distribution system hot unbalanced gains between foreign iron ore suppliers and domestic Chinese steel producers said untenable, Lejiang. Prices for imported iron ore in China to around 700% have increased in the last decade, over global steel prices by far less than the half increased, the. The average profit margin of China's steel industry was less than 3% in the last year to Lejiang.
Steel industry combined profits including Rio Tinto, BHP Billiton and Vale, China are reported China's most important raw materials suppliers. China Steel Mills again losses in the first quarter slipped, the Association said.
Reported earlier this week, said Shanghai daily Angang steel co, net first-quarter profit plunged a reduction from 80% 94 percent while Maanshan iron & steel co posted, in its Saturday Edition. In the meantime, reached 1.93 million tons daily crude steel production a record in the first two months, beat 706 million tonnes this year according to the China iron & steel Association.
Perceived changes to China's iron ore demand undoubtedly sends Vale, BHP and Rio shares lower, if this narrative of China low profit margins compared to a steel iron ore price pressure in the coming months will continue.
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