09/17/2014

G-METAL VALVES CORP.

steel market Debts pile up,weighing on steelmakers

The first six months of 2014 were not easy for a slowing Chinese economy. For China's steel companies, times were even harder. Over half of the listed Chinese steel companies saw their debts approach alarming levels in the January-June period, with steelmakers filing their half-year results to stock exchanges by the end of August. Of all 33 listed steelmakers, 18 firms posted a debt-to-asset ratio higher than 70 percent, with Xinjiang-based Bayi Iron & Steel Co, Ltd was burdened with the highest debt ratio at 86.46 percent, according to their financial statements. "For steel companies, a debt-to-asset ratio higher than 70 percent means the firm is facing a capital problem," said Zhang Lin, an analyst with lgmi.com, a steel information service website. Zhang expected the debt problem to worsen for steel companies as the sector tends to make substantial investments that usually takes a very long period to mature. Even for the best performing steel companies, the debt-to-asset ratio remained above 60 percent, a level Zhang said underlines the hardship of the entire sector. China currently has 86 steel companies that produced 411.91 million tons of crude steel, 362.02 million tons of pig iron and 552.25 million tons.