Posts Tagged ‘china steel to takeover’

China’s steel giants lost $11 billion in first 10 months of 2015

Saturday, December 5th, 2015


Chinese steelmakers, determined to keep their world’s leadership in the sector, have been neglecting profits to the point that they churned out a combined $11 billion (Rmb72bn) from January to October this year, or more than double the profits reaped in 2014.

As domestic demand began waning, the country’s exports of the metal went the opposite way — they increased 25% to 92 million metric tons in the same period. But, as Financial Times reports, the boost in shipments was not enough to offset the effects of a declining local market. This, as Beijing has only cut 50m tonnes of steel manufacturing capacity this year, or a mere 4% of its total 1.14 bn tonnes of capacity, the paper said quoting data from HSBC:

The bank calculates China would need to cut an additional 120m to 160m tonnes of capacity next year for the industry-wide utilization rate to reach a “relatively healthy” level of 80 per cent.

“The problem with China is that they want to sell at any price, not withstanding the losses that they are incurring

“The problem with China is that they want to sell at any price, not withstanding the losses that they are incurring,” Seshagiri Rao, chief financial officer at JSW Steel, India’s third-largest steelmaker, told Bloomberg. That’s an “unfair trade” strategy, Rao said.

The slump in steel prices is, as expected, adding more pain to the already troubled iron ore market. The steel-making ingredient fell to a 10-year-low of $39.40 a tonne, the lowest ever recorded by price assessor The Steel Index (TSI), which began compiling data in 2008. Meanwhile, the most-active iron ore futures in Singapore also sank below $40 a tonne this week for the first time ever.

The decline in Chinese steel consumption is accelerating with use falling almost 6% to 590.47 million tonnes in the January to October period, industry group China Iron and Steel Association said in November. That’s tracking way below estimates by the World Steel Organization, which forecasts steel demand in China will shrink by 3.5% before the end of the year.


Henry Sapiecha


Monday, August 22nd, 2011


BlueScope Steel considered shutting down its entire manufacturing operations before opting for today’s rationalisation plan that will axe more than 1000 jobs.

The nations biggest steelmaker confirmed it would abandon its export business, in a move that will require its blast furnace capacity at Port Kembla to be halved, and a Hot Strip Mill at Western Port to be shut down.

Bluescope shares extended their recent losses today, losing 4.5 cents, or 5.7 per cent, to 74.5 cents. The stock has lost 67 per cent of its value this year compared with a 14 per cent fall for the ASX200 share index.

Bluescope chief exective Paul O’Malley said the changes would cost 800 of the 3100 jobs at Port Kembla, and 200 of the 1000 jobs at Western Port, with most of those workers to be gone by October.

But the job losses won’t end there with Mr O’Malley saying that significant numbers of contractors would also lose work.

”Contractors will be affected, and we can only make estimates on that … but in total it may be in the order of about 400 contractors who certainly won’t be working at the steelworks,” he said.

Mr O’Malley said the axed workers had an ”iron clad” guarantee of being paid out their entitlements, and would be treated with ”respect” throughout the process.

The changes come after a lengthy review which Mr O’Malley said considered all options, including a complete shutdown of all manufacturing, or a joint venture with foreign companies.

He said Bluescope had settled on this plan – which effectively reduces the company back to a domestic producer – because it would make the company viable in the current difficult economic circumstances, and very profitable if conditions improved.

”Moving to a complete shut is absolutely the wrong decision for the company, the shareholders and Australia, which is why we are going on the path we are going on,” he said.

The company reported an underlying loss of $118 million for the year to June, which ballooned to $1.054 billion once asset writedowns are included.

The poor result was caused by the high Australian dollar, a global glut in steel production, poor demand for construction in Australia and extremely high costs for steelmaking ingredients like iron ore and coal.

The company said it was also on the look out for acquisition opportunities in the iron ore sector – following rival OneSteel’s move today to increase its iron ore exporting business from six million tonnes per year to nearly 10 million tonnes per year.

The company stressed the changes had nothing to do with the Federal Government’s planned carbon tax, and Prime Minister Julia Gillard indicated Bluescope would be allowed to receive some of its planned support funding earlier than originally planned.

The Victorian and NSW Governments, in concert with the Federal Government, were also moving yesterday to mobilise support packages in the Western Port and Illawarra regions

Sourced & published by Henry Sapiecha

Henry Sapiecha