Losses felt throughout China's steel industry chain.

The once-robust Chinese steel industry is grinding to a halt as the country's economy slows amid the European debt crisis and slow recovery in the United States. Piles of iron ore have been left idle at the country's ports while steel factories have dismantled their bulk carriers to make up for their losses.

China has been the world's largest steel market for decades, producing over 40% of steel products and accounting for 60% of the world's iron ore trading. Yet with foreign demand dragged down by the global economic downturn, the country's steel industry is facing tremendous pressure from overcapacity and high inventory, according to our Chinese-language sister newspaper Want Daily.

The steel industry saw its first deficit in trading sine 2000 in the first quarter of this year, according to the China Iron and Steel Association. Many producers refused to honor their contracts and put the blame on the shrinking market, forcing iron ore traders to dump their deliveries at the port of Qingdao. Iron ore stocked at China's ports reportedly reached 97.24 million tons as of May 28 and hit a historic high at major terminals such as Qingdao and Rizhao. Some ports have turned away cargo ships because as they have no available storage capacity.

Senior managers at the state-run Shandong Iron and Steel Group said the company has reduced its production and sought other sources of income to mitigate its losses. Shanghai Baosteel, the third-largest steel company in the country, said half of its revenue last year came from sources other than its steel business, while Wuhan Iron and Steel Group plans to move into rearing pigs.

Other businesses in the steel industry chain have all felt the impact. Trading, shipping, freight forwarders and shipbuilding have been struggling to survive. Owners of bulk carriers shipping iron ore have reportedly broken down their ships and sold the scrap iron for cash after suffering consistent losses.

By Staff Reporter
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1102&MainCatID=11&id=20120602000038