DOMESTIC steel transporter Anhui Wanjiang Logistics yesterday said 2 billion yuan (US$326 million) of its loans were overdue and its chairman had been detained by police, in the latest sign of strain in the country’s troubled steel sector.

    The news comes after China’s State metals trader Sinosteel Corp. said Tuesday that it was facing financial problems although it denied rumors it was struggling under the weight of overdue loans amounting to 10 billion yuan.

    Shanghai-listed Anhui Wanjiang, which specializes in steel cargo logistics, said in a statement that it had about 16.7 billion yuan in debt, including 12.7 billion yuan owed to 19 banks, of which almost 1 billion yuan was overdue.

    It also had an additional 1.1 billion yuan in non-bank loans overdue.

    Anhui Wanjiang said it had been hit by mounting pressure on China’s steel sector, and that it had used up its credit quota, leaving it with no working capital. Banks had extended the loans despite it only having 1 billion yuan in capital, the firm said.

    The company also said police had detained its former and current chairmen as well as its chief accountant for misuse of authority and not performing their duties properly.

    It said Sept. 11 that it had been put on a credit rating watch list due to its debts, and that its logistics unit had been sued by China Minsheng Banking Group because it had been unable to pay its maturing debt in full.

    Share trading in the company, known as Wuhu Port Storage & Transportation until late last month, has been suspended since Sept. 9. In August, it reported a 50 percent slump in first-half profit from a year earlier.

    Chinese steel firms have been pressured by an economic slowdown and a supply glut that has driven product prices down to eight-year lows and iron ore to its weakest since 2009. (SD-Agencies)