The past for Chinese steel is unclear, but the future is certain. The signs for the remainder of the year are, unfortunately, uniformly bad. The price of benchmark hot rolled steel has fallen 19% since April. In the first half of this year, the profits of steel companies dropped 96% from the corresponding period in 2011. Steelmakers have been defaulting on their obligations to purchase iron ore, a sure sign production will tumble soon. Daily output this month, according to the analysts at Mirae Assets Securities, could be as low as 1.85 million tons. Record production in the face of weak demand suggests inventories must be rising.
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