Mills' profits shrink in June

A source from the CISA said 77 medium and large domestic steelmakers reported a combined profit of 6.25 billion yuan in June, down nearly 40 percent from May. But the six-month figures totaled 50.72 billion yuan, up 21.22 times year-on-year.

In May, China's crude steel output stood at 56.14 million tons, up 20.7 percent, having surpassed the 50 million tons mark for five consecutive months. Its output in June would exceed 52 million tons. The rapid unleashing of steel capacity, in company with a surge in international protectionism, has led to a growing pressure of steel inventory. In early July, steel stocks in 20-plus cities amounted to 15.09 million tons, an increase of 74 percent from a year ago.

These steel mills have found themselves in a fairly tough situation, especially at a time when raw materials costs such as water, electricity, coke, fuel, transportation and iron ore are soaring. Many producers began slashing output from June, and the number is still growing.

It is worth noting that the domestic steel price index rose by 4.4 percent to 149.3 points last week. But some prudent experts have referred to the recovery as some psychological reason that may associate with the government's 60 billion yuan fiscal spending on the building of social security houses. Objectively, it is almost impossible for the prices to rise sharply in a market brimming with steel.