According to report from China Iron & Steel Association, the 86 members steel mills’ October profit dropped to RMB 1.716 billion, down by 47.5% from September of RMB 3.266 billion, the highest in the year. 18 members reported losses in October, compared to only 14 in September.
It is also expected that the mills may continue to face the soft market and profits down in November to December period.
However, the performance may rebound in 2014 due to the higher capacity utilization which help raising the margins.
Analysts see that China’s crude steel capacity will be unchanged in 2014 around 1 billion tons; however, the crude steel output will increase from 776 million tons of 2013 to 808 million tons in 2014 on capacity utilization improvement.
Nevertheless, some analysts may see overcapacity may still the problem and the government may try to eliminate outdated facilities to reduce the pollution from the industry.