July 31 (Bloomberg) -- China’s major steelmakers had a combined loss of 699 million yuan ($114 million) in June, the first monthly loss of this year, as a market glut weighed on prices, the China Iron and Steel Association said.
Stockpiles held by traders rose to 15.46 million metric tons as of June 30, up 30 percent from the start of the year, the producer-funded group said today in a statement on its website. Still, June inventories were lower than the 19.97 million tons as of the end of March, CISA said.
China is studying a plan to reduce overcapacity in steel, cement, aluminum and other industries after output increased without effective supervision, the official newspaper of the Communist Party reported yesterday. Premier Li Keqiang has pledged to curb excess production, which Chinese authorities have cited for driving down the prices of industrial goods and eroding company profits.
“The market glut won’t be relieved in the second half without an effective control on steel production as the inventories remain high,” CISA said in the statement.
The 86 mills had aggregate profit of 2.27 billion yuan in the first half and an average profit margin of 0.13 percent, which is the lowest level of all industries of the country, the association said.
Apparent consumption of steel advanced 6.8 percent to 364.8 million tons in the first half from a year ago, the group said. Real demand growth was slower than that because of the high inventories, it said.
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