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Steel prices have tumbled 27 per cent on the mainland this year. Photo: Reuters

Sinosteel admits to financial difficulties amid economic slowdown

Sinosteel, a state-owned mainland mining company and steel trader, said it is facing financial difficulties as the economy slows and some customers are not paying on time.

Sinosteel, a state-owned mainland mining company and steel trader, said it is facing financial difficulties as the economy slows and some customers are not paying on time.

The company was taking measures to improve earnings and maintain cash flow, said a Sinosteel official, who asked not to be identified.

The official denied a report on NetEase.com that Sinosteel had more than 10 billion yuan (HK$12.6 billion) in overdue loans owed to banks including Industrial and Commercial Bank of China and Bank of Communications.

Steel traders are having trouble repaying loans as steel prices have tumbled 27 per cent on the mainland this year amid industry overcapacity and slowing demand from home builders. A court in Shanghai received 1,051 disputes worth a combined 11.4 billion yuan regarding lending to steel traders in the first quarter of this year, the reported in April.

The state-owned Assets Supervision and Administration Commission removed Sinosteel president Huang Tianwen from his post in May 2011, without giving a reason, after the company was accused of inflating sales at its units by the National Audit Office. China Minmetals Corp rejected a merger with Sinosteel because its assets were "excessively poor", the reported in January last year, citing an anonymous source.

Sinosteel, which bought Australian iron ore miner Midwest for A$1.4 billion (HK$9.6 billion) in 2008 and has a stake in Rio Tinto's Channar ore mine, posted revenue of 140 billion yuan last year, according to its website, compared with 186 billion yuan in 2010.

This article appeared in the South China Morning Post print edition as: Sinosteel in financial trouble amid slowdown
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