China: Largest Steelmaker Cutting Back Production

Econintersect:  The slowdown in China (see GEI News) continues to have casualties.  This morning (27 September 2012) Baoshan Iron & Steel announced 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.

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

Sources:

• China’s Baosteel suspends production at loss-making plant (Samuel Shen and Fayen Wong, Reuters, 27 September 2012)

• China’s Baoshan suspends steel plant as demand slows (BBC, 26 September 2012)

• Baoshan Steel shares rise as it announces buy back plan (BBC, 28 August 2012)

• China:  Flash PMI Up Slightly, Re;iminary Reading (GEI News, 21 September 2012)

• Baoshan Steel Halting Production at China Factory (Bloomberg Businessweek, 26 September 2012)