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Major domestic steel makers face first-quarter losses due to decreasing demand, and they are likely to stay in the red for some months, analysts said.
Hunan Valin Steel Co, one of the top 10 steel makers, on Saturday estimated its first-quarter loss was 690 million yuan ($110 million) to 730 million yuan, up nearly 200 million yuan year-on-year.
Also that day, Angang Steel Co estimated a loss of 1.8 billion yuan, while Shougang Group reported a loss of 140 million yuan to 160 million yuan.
"Besides fewer orders, another reason for the losses is persistent high iron ore prices," said Zhang Lin, a senior analyst at the Beijing Lange Steel Information Research Center.
"Many steel makers are working hard to cut costs and increase efficiency, but it won't help much."
She said even though the industry's conditions are usually best in the second quarter, prices will not increase much.
According to public statistics, daily crude steel output in March was 1.98 million tons, which is relatively high.
Zhang said rising output will mean larger inventories and lower prices, which won't help profitability.
The global economy is still weakening and 皇冠体育app's GDP growth and investment are falling quickly, causing a big drop in domestic steel demand. All these factors are hurting profits, according to a report by Cinda Securities Co Ltd.
However, global miners remain enthusiastic about 皇冠体育app's iron ore market and want to export more to the country.
Australia is the world's biggest iron ore producer and its iron ore trading volume accounts for about 42 percent of the world total.
Frances Adamson, Australian ambassador to 皇冠体育app, said on Monday that Australia will double its iron ore output in the coming years, primarily to meet 皇冠体育app's demand.
"Australia has been a reliable supplier of iron ore for 皇冠体育app and is the first choice for 皇冠体育app's resource imports in the long term," she said.
Atlas Iron Ltd, the fourth-largest iron ore company in Australia, shipped 10 million tons of the commodity to 皇冠体育app between 2008 and Jan 1 this year.
The company estimated it would ship 6 million to 9 million tons of iron ore to 皇冠体育app in 2012.
David Flanagan, executive chairman of the company, said: "We see 皇冠体育app as a big market and the business with 皇冠体育app will grow."
Many industry insiders believe that iron ore supply will exceed demand in 2013 and 2014, but Flanagan said that wouldn't happen soon.
Atlas is seeking to establish joint ventures with Chinese partners in mining projects. It might also cooperate with Chinese companies on infrastructure projects such as railways and ports.
It also said it is in discussions regarding 皇冠体育app's new physical iron ore trading platform.
"All the foreign iron ore traders see 皇冠体育app as their current or future main market," she said.
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