2010-11-23 17:08

BEIJING - Gross profit at China's large-scale steel companies exceeded 7 billion yuan ($1.05 billion) in October, up 21 percent from the previous month, according to data issued by the China Iron and Steel Association (CISA) on Tuesday.

The 77 member companies monitored by CISA saw steady improvement in profitability over the year, earning 64 billion yuan over the first three quarters, almost double the same period last year, the association said.

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However, profit margins stood at just 2.84 percent over the first nine months, and the domestic steel industry remains at the mercy of small fluctuations in product or raw materials prices.

Demand for steel traditionally weakens in the winter months, but many in the industry are hoping that widespread capacity closures brought about by a nationwide energy efficiency drive will help shore up prices in November and December.

Prices reached their highest in 16 months earlier in November in anticipation of a supply crunch, but have since retreated.

CISA said in its regular report last week that prices were likely to remain volatile until the end of the year, with oversupply still a big problem in the industry. Chinese steel companies have also been hit by rising iron ore prices following a decision by an Indian court to uphold a ban on exports from the country's key exporting region, Karnataka.

The Steel Index iron ore benchmark rose $1.6 to $164.4 per ton on Monday, its highest since May 17.

CISA said last week that rising ore costs could offer some support to steel product prices in the weeks to come.