A pile of steel tubing at a steel product market in Wuhan of Hubei Province, China. The recent slowdown of economic growth in mainland China has resulted in reduced prices for steel. (China Photos/Getty Images)
The Nanjing Iron and Steel United Co. Ltd. (NISCO), with an annual production of 6.5 million tons, was ranked number 20 for production among China’s key iron and steel companies in 2007. Its profit was ranked number eight, and its profit per ton of steel was ranked number four. But even with profits greater than that of a large steel company of over 10-million tons production, NISCO struggles for its survival within China’s current economic slowdown.
The Hua Xia Times reports that at the Third China Steel Raw Materials & Fuels Summit organized by the Umetal.net website, NISCO general manager Yang Siming estimated that all long steel products will suffer large losses, and NISCO will be forced to reduce production by 10 percent to deal with the crisis.
With pressure from both directions, production cuts are no longer unique to mid and small sized steel companies. Large iron and steel corporations have also been forced to take direct measures to cut losses. On the same day that the news of NISCO’s production cuts was released, several sources disclosed that the industry leader, Baosteel Group Corporation, will also initiate production cuts. Although Baosteel did not explicitly announce the production cuts, the similarly sized Wuhan Iron and Steel (Group) Corp. (WISCO) and Tangshan Iron and Steel Co., Ltd. have announced “production cuts.”
Analyst Niu Wei of the Custeel website’s iron and steel channel said that WISCO is expected to conduct 10 to 15 days of maintenance on its cold-rolling production line in mid September, affecting 50,000 to 60,000 tons of cold rolling production. Currently, steel corporations, especially large-scaled ones, generally use the excuse of maintenance to reduce production.
