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Volatile year leaves China steelmakers facing a loss

Keywords: Tags  steel, Chinese steelmakers, Beijing, losses

SHANGHAI — For China’s steelmakers, 2012 was another challenging, volatile and—for many—loss-making year.

With domestic prices witnessing sharp ups and downs, many Chinese steel companies were in the red in 2012. Spot prices for hot-rolled coil dropped to about 3,100 yuan ($498) per tonne from 4,300 yuan ($690) per tonne over the first three quarters, a decrease of nearly 28 percent.

Steel prices bottomed out in early September, largely due to Beijing’s efforts to stabilize the economy by approving more construction projects but also due to the third round of quantitative easing in the United States and a reduction in steel output by Chinese steelmakers. As a result, hot-rolled coil prices returned to a range of 4,000 to 4,100 yuan ($642 to $658) per tonne by the end of the year.

That extreme volatility produced a lot of problems both for mills and traders, and a number of major steel companies are expected to log financial losses when they report their 2012 results.

A version of this article was first published by AMM sister publication Steel First.

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