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“It is not viable to continue producing when we are making a loss of 200-300 yuan [$32-49] per tonne,” a source close to the privately-owned mill told Steel First on Thursday March 20.

The mill, which is based in central China’s Shanxi province stopped operation of its five other furnaces last week after defaulting on loans.

However, Haixin is not bankrupt, the source stressed, and is still seeking local government support.

“Haixin expects to be granted sufficient loans by the end of the month,” the source said.

The source did not rule out the possibility of Haixin restarting its furnaces once its credit problems are solved.

However, the source noted that the company is now more interested in investing in other, non-steelmaking industries such as real estate and education.

“It will be increasingly difficult for a steel mill to restart its blast furnace once it is shut down, especially when the steel industry is going from bad to worse,” an industry analyst in Shandong said.

Haixin, which is primarily a producer of long steel products, has made “aggressive” capacity expansions in the past few years, but the company has suffered from a weak construction sector and an oversubscribed longs market.

“Debt-laden private steel mills with poor management are among the first to be phased out in the current market. But it is hard to say who would be the next,” he added.

Haixin has a production capacity of 6 million tpy. It can produce 2.6 million tpy of construction steel and 2.6 million tpy of slab. Its 2.2 million tpy hot rolled coil line is still under construction, according to information on its website.