According to statistics released by the China Iron and Steel Association (CISA), in the first half of 2009, 71 large and medium-sized steel enterprises achieved revenue of 955.03 billion yuan from their main business,

down 28 percent year-on-year; their profits totaled 1.73 billion yuan, down 98 percent year-on-year.

In contrast, some small and medium-sized steel enterprises were
operating at full capacity between mid-April and the end of August when
steel prices rose.

According to Li Xinchuang, executive vice director and chief engineer
at the China Metallurgical Industrial Planning and Research Institute,
in the first half, investment in infrastructure construction stimulated
China’s economic growth and about 55 percent of steel consumption went
to the infrastructure construction sector.

Infrastructure construction mainly consumes long steel products, which
are mainly produced by small and medium-sized steel enterprises, while
large and medium-sized enterprises mainly produce steel sheets and
plates.

Moreover, the sharp decline in steel exports has also created a
difficult situation for large and medium-sized steel enterprises.

However, this situation is not expected to last long. At present, most
of China’s infrastructure construction uses reinforced concrete
structure, which damages the environment.

For example, 30-40 percent of the reinforced concrete used to build
overpasses in many cities is wasted. This outdated construction method
provides many opportunities to small and medium-sized steel
enterprises.

Therefore Li believes that China should raise construction steel
standards, and lead China’s steel enterprises to continue improving
product lines and avoiding low-level competition.

Source: People’s Daily Online

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