China Iron & Steel Association said that China steel industry was in face of high production costs and low profits on the rising iron ore prices in the international market in the first quarter this year. The output capacity of the whole steel industry reached 0.768 billion tonnes per annum at the end of 2010, with market supplying capacity exceeding real demand.

In the Q1 2011, the averaged steel production cost rose by 27.5% YoY large and medium sized steel enterprises’ net profits totaled CNY 24.46 billion, with profit rate of 2.91%, down 3.29%, compared with the averaged rate of 6.2% of whole national industry.

Apart from that, 10 of total 77 large and medium sized enterprises suffered profit losses of CNY 0.65 billion, 13% of the total.