CHINESE State metals trader Sinosteel Corp. is not about to undergo a restructuring as a result of mounting debt, a company official said Tuesday, denying domestic media reports.

    China’s biggest State-owned steel trader earlier told financial magazine Caixin that it was facing financial problems as a result of unpaid bills from customers, but it denied rumors that it is struggling under the weight of overdue loans amounting to 10 billion yuan (US$1.63 billion).

    A number of Chinese news websites said the government was planning to fork out 20 billion yuan to rescue Sinosteel, in what would have been one of the largest bailouts ever of a government conglomerate.

    A Sinosteel official, who declined to be named, said that he “didn’t know why this was being stirred up again now.”

    “The company hasn’t made any restructuring or bankruptcy announcement recently and this is probably nothing,” the official said.

    Pressure has mounted on Chinese trading firms this year as a result of an economic slowdown and a supply glut that has driven steel product prices down to eight-year lows and iron ore to its weakest since 2009.

    Media reports claimed Sinosteel — China’s second-biggest importer of iron ore and the trading agent for many of the country’s steel mills — was unable to meet billions of dollars in loan principal and interest repayments to a number of banks, including Industrial and Commercial Bank of China Ltd. (ICBC).

    An ICBC spokesman said yesterday that Sinosteel hadn’t defaulted on any loans, and that the bank’s exposure represented less than 1.3 percent of the conglomerate’s total borrowing from financial institutions.

    Loss-making traders have tried to survive by borrowing and hoping that prices will recover, but a crackdown on cheap credit, tightened in the wake of an investigation into financing fraud at Qingdao port beginning in June, has left many of them unable to continue operating.

    In late August, a unit of China’s Shanxi Coal International filed a lawsuit claiming that two of Sinosteel’s units had failed to deliver metal on time.

    Some steelmakers, including Xilin Iron and Steel Group in China’s northeastern Heilongjiang Province, have been forced to close as a result of mounting debt. (SD-Agencies)