China: Largest Steelmaker Cutting Back Production

September 27th, 2012
in econ_news, syndication

Econintersect:  The slowdown in China (see GEI News) continues to have casualties.  This morning (27 September 2012) Baoshan Iron & Steel breaking-news-130pxannounced it had suspended production at its plant in Shanghai.  According to Reuters the plant has been losing money.  Ever since the Chinese government has clamped down on the real estate construction boom the countires huge steel industry (the world's largest) has been struggling with overcapacity and reduced profits and losses (Reuters).  The plant in Shanghai, however, manufactures steel plates used primarily in ships and manufacturing, according to the BBC.

Follow up:

According to the BBC:

Steel production has slowed and iron ore prices have fallen about 25% this year.

Analysts say that the low prices mean mills are under pressure and that more production cuts are expected from steelmakers in China.

Just a month ago Baoshan's shares jumped 10% (28 August) after the company announce it would buy back up to 5bn yuan ($786m; £500m) worth of stock.  The price rose to 4.56 yuan with the announcement on August 28.  The price remained near that level at 4.46 yuan after the shutdown was announced.

Econintersect has not been able to determine how many workers are affected.

John Lounsbury


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