Year Twenty Begins
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FEEDThe longer I live, the shorter life gets. It’s a truism, I suppose, and
one of many which occur to humans as the years roll by. See, I started
Slope as...
2011-12-05
Chinese steel industry profit margins collapse
Hugh Hendry coined the "Confucian" aphorism, "Wise man not invest in overcapacity."
Chinese steel industry profit margins hits a historic low, 0.47% profit margin far below interest rates 钢企利润率创历史新低 0.47%利润率远低于利率水平
October profits fell 82% from September. Inventories are up 20-30% over the start of the year. Steel industry debt ratio is 67% and most of the debt is in the form of bank loans. Banks currently pay 3.50% interest on one-year deposits. Since steel is considered a fundamental industry for infrastructure and national development, bank loans have not been restricted and fixed asset investment in mining grew 17.4% over last year, while smelting and rolling fixed asset investment grew 18.9%.
Below is the Baoshan Compostite Steel Price Index, based on contracted prices. The first chart shows the drop in 2008, the second is the recent price decline.
Here's a short English article covering the news: Chinese steelmakers see profits plunge
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