BAOSHAN Iron & Steel Co. (Baosteel), China’s biggest listed steelmaker by market value, expects no significant improvement in the industry’s prospects this year after posting a 42 percent fall in net profit for 2013.

    Domestic steelmakers are facing their toughest period since the global financial crisis as they battle sluggish demand growth, massive output surpluses and mounting environmental protection costs as China pushes to restructure its bloated industries.

    Baosteel’s net profit for 2013 was 5.82 billion yuan (US$936.75 million), the company said Friday, as overcapacity and slower demand growth hit prices.

    “In 2014, China’s steel industry will continue to operate with tiny profit, with no big improvement in sight,” the firm said.

    “The situation of steel overcapacity and oversupply as a result of weaker demand from downstream customers will continue to persist in the short term.”

    The Shanghai-based firm said in January it expected a sharp fall of 44.4 percent in last year’s net profit. Its preliminary results showed that the 2013 net profit was 5.78 billion yuan.

    China’s steel sector faces huge challenges this year. The government has decided to consolidate ill-regulated industrial sectors and improve air quality by cracking down on outdated and polluting mills.

    The government has also cautiously stepped aside to let market forces play a bigger role in deciding winners and losers and tightened lending, which may leave many heavily-indebted smaller private steel firms exposed to defaults.

    Many banks have reduced lending for industries including steel, shipbuilding and cement. Some steel mills were told by banks that their 2014 credit limit would be 20 percent below the amount they borrowed last year. (SD-Agencies)