China's steel sector poised for rebound after 50 bln yuan of Q4 losses

BEIJING, Feb. 5 (Chinese media) -- China's steel sector

might have lost up to 49.6 billion yuan (about 7.3 billion U.S. dollars) in the

fourth quarter as prices plunged and inventory built up, an industry association

said.

An official of the China Iron Steel Association

(CISA), speaking on condition of anonymity, said that out of 71 large and

medium-sized steel producers the group monitored, 62 percent had losses that

totaled 29.1 billion yuan in December.

The companies lost 7.77 billion yuan and 12.77

billion yuan in October and November, respectively, according to CISA.

"The weak performance was due to sagging demand

[because of] the global economic crisis, which resulted in inventory build-ups,"

said Hu Yanping, an analyst with the Beijing-based Umetal, a steel information

consulting company.

Angang Steel Co. Ltd., one of the country's top three

steel producers, said in late January that its unaudited losses reached 4.83

billion yuan in December. It attributed the loss to steep prices falls and slow

inventory movement starting in the second half of last year.

But there are signs of returning confidence in the

steel sector, with prices rising since November, according to Umetal.

Construction steel prices reached 3,850 yuan per ton in Beijing as of Wednesday,

up almost 200 yuan from two weeks earlier, Hu said.

Production has held steady, with total output of

about 40 million tonnes in January, the same as a year earlier, CISA said. It

said that showed a recovery of confidence in the sector.