China’s Intermediate People’s Court of Bayingolin has declared bankruptcy of Xinjiang Jinte Steel Company. The company had been struggling to pay its debts for over four years and subsequently applied for bankruptcy reorganization in late 2018.
The court, however, has rejected the reorganization plan and declared debtor bankruptcy, according to a China Metallurgical News report.
Jinte steel, an integrated steelmaker, had production systems including mining, beneficiation, pelletizing, sintering, ironmaking, steelmaking and steel rolling, among others. After suffering losses for two successive years in 2014 and 2015, the company became the first in China to repay bonds at discount in May 2018. Through an early redemption, institutional holders were paid 60pc of the par value while the interest was paid in full. Individual investors received the interest and the holding value in full.
A decline in capacity utilization
Jinte’s capacity at the end of 2012 was 800,000mt high-line steel, 350,000mt grade II and III rebars, and 200,000mt of ductile pipe. However, the company’s capacity utilization levels remained low ever since.
Amid a glut of steel, many companies in Xinjiang reduced production, and capacity utilization in the region fell to 29pc. Jinte Steel also curbed its production to minimize losses. China’s supply-side reforms showed some impact and in 2016, the company ramped up its production. But repeated shutdowns in the subsequent period affected the company’s performance.