The 86 major steel mills tracked by the China Iron and Steel Association (CISA) posted a combined 2.3 billion yuan profit in July after domestic steel prices bounced back, the CISA said.

They recorded 699 million yuan in the red in June, the first monthly loss in 2013.

Profit margin rose to 0.77% in July, the highest in the year so far.

The profits were hard earned against an economic slowdown, tougher competition and rampant excess capacity, said Xue Heping, an official with the CISA.

Steel prices in China are on the rise and steelmakers are beefing up efficiency and risk control, so the industry is expected to fare better this year than last year, according to Xue.

The 86 mills posted 4.9 billion yuan in profits between January and July, an increase of 4.6 billion yuan over the same period of 2012, CISA figures show. Their total liabilities amounted to 3.03 trillion yuan, with a debt-to-asset ratio of 69.67%, up from 68.12% a year earlier.

China's major steelmakers posted 3.54 trillion yuan in revenues and 1.58 billion yuan in gross profits in 2012, down 4.3% and 98.22% respectively from the year before. Their profit margin was merely 0.04% as result of low prices and higher costs.

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