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Nearly half of steel mills in the red in March

(Agencies)
Updated: 2009-04-23 11:58

Nearly half of major Chinese steel mills were mired in the red in March, official newspapers quoted a senior industry executive as saying on Thursday, as oversupply in the country weighed on product prices.

Related readings:  China's March crude steel output stays high  Bayi Steel slips into the red on weak demand  China imports record volume of iron ore in March Tianjin plans 23m-ton steel group

Losses were expected to expand in early April as Chinese steel prices continued to fall, Wu Xichun, honorary chairman of China Iron and Steel Association, was quoted as saying by the China Securities Journal and the Shanghai Securities News.

Large- and medium-sized steel mills in China saw a combined net loss of 1.91 billion yuan ($279.7 million), while 33 mills suffered losses, Wu told an industry meeting on Wednesday.

Oversupply of hot-rolled steel coil, once considered a standard product of modern steel mills in China, was a key drag on the profits of 5 to 10 million-ton capacity steel mills, another association official told the China Securities Journal.

Chinese steel mills, led by national leader Baosteel, are locked in annual iron ore price negotiations with miners including BHP Billiton, Rio Tinto and Vale.

Chinese firms have cited the slump in domestic steel prices as justification for cheaper ore from suppliers for this fiscal year, but their high output has been cited as strong evidence of good appetite in the world's top steel making country.