The Profit Margin of China Steel industry Continues to Drop

2012-05-23

The sales revenue profit margin of China steel industry have continued declining recently, lowering from 7.26% in 2007 to 2.42% in 2011 and staying in the lowest level of the nationwide industry field. “Many reasons have caused the weakening of steel prices,” indicated Chi Jingdong, Deputy Secretary-General and Chief Analyst of China Iron and Steel Association (CISA). In terms of the external environment, the material demand of China steel industry has high dependence on foreign supply and the world’s top three iron ore companies have monopolized the raw material price, which made the profits significantly turns to material source. In addition, the serious excess capacity of China steel Industry forces enterprises to take the vicious low pricing strategies to obtain more orders.