09:50 EDT X, NUE, AKS, MT theflyonthewall.com: Report: China's steel sector suffers "massive" Q1 losses, Reuters says High raw material costs and sluggish demand caused China's steel mills to record massive losses of about $444M in the first quarter, according to Reuters, citing a report in the official China Securities Journal that referred to data from the China Iron & Steel Association.
"This is the first time the whole steel sector has suffered losses since the 21st century," an unnamed CISA official was quoted as saying.
Chinese steel mills, producing around half of the world's steel output, lost 2.8 billion yuan ($444.23 million) in the first two months of this year, the paper said.
The CISA official did not disclose the total losses Chinese steelmakers made in the first three months.
"The situation may improve in the second to third quarter, but steel mills still find it difficult to avoid losses and they have faced huge pressure on shrinking demand," the official added.
The double-whammy of high production costs and a rapid decline in steel demand has forced the world's largest steel sector to produce at losses since the fourth quarter last year.
Chinese steelmakers, producing around half of the world's steel output, have ramped up production to tap into a seasonal pick-up in steel demand, shrugging off cooling economic growth in the world's second-largest economy.
China's major steelmaker, Angang Steel , expects to record a net loss of 1.888 billion yuan for the first quarter after losing 2.16 billion yuan for 2011.
Despite the seasonal recovery in steel demand, the slower-than-expected pace will continue to weigh on steelmakers as China's steel output continues to rise rapidly, hitting a record 61.58 million tonnes in March.
Other major steel mills like Baosteel and Wuhan Steel are expected to announce their first-quarter earnings later next week. ($1 = 6.3030 Chinese yuan) (Reporting by Ruby Lian and Kazunori Takada; Editing by Sugita Katyal)