China's apparent steel demand in the first six months of 2014 rose 0.4 percent from a year earlier to 376 million tonnes, China Iron Ore and Steel Association (CISA) said on Friday, adding that a slowing economy was weighing on the sector.
Steel demand in China, the world's top producer of the metal, will continue to rise in volume terms but overall growth will be limited, the association said in a statement.
China's bloated steel sector, which has an estimated production capacity of more than 1 billion tonnes, is heaving under the weight of poor margins, weakening demand from the key construction sector and a government crackdown on overcapacity.
In a sign of slackening demand, CISA said inventories held by large steel mills stood at 14.46 million tonnes by the end of June, the first increase after three months of decline.
CISA said 28.4 percent of large and medium-sized steel mills made losses in the first half of 2014, down 7.94 percentage points from year ago. Profit margin averaged at 0.41 percent in the first six months of 2014, up 0.23 percentage points.
Still, steel mills are facing financing stress and the cost of debt was too high, the association said.
On steel exports, which have jumped 34 percent in the first half from year ago to 41 million tonnes, CISA said exports were unlikely to increase further due to growing trade frictions.
China's 2014 crude steel output is expected to climb three percent from year ago, CISA said.
Source: Reuters
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