The iron and steel industry in Hebei province continued its downward trend in June, showing low profits for area companies and a purchase management index (PMI) of 43.4 percent, or a month-on-month decrease of 3.1 percent.

This was the fifth consecutive month for the industry to stay in recession, according to Metallurgical Industry Association statistics, published on June 30. Tighter budgets caused iron companies to lower their inventories for the month, which saw a decline of iron ore purchases by Chinese and foreign countries. In addition, the raw materials stock index of companies fell for seven months in a row, to about 33 percent, in June.

Wang Dayong, the secretary general of the industry association, remarked, "Iron companies face more pressures from a tight cash flow, so, if the market keeps its downturn, some of them will step out for awhile," then added that the entire industry, which is a pillar of the provincial economy, is facing a tough situation.

The pressure from low prices and high raw material costs will continue for some time and will hinder the healthy development of this traditional industry. Most provincial iron and steel companies will not see profits increase in the short term.