Angang Steel Co. (347), China’s largest Hong Kong-traded producer of the alloy, said it expects to swing to a loss in the first half after prices plunged.
The loss was 1.98 billion yuan ($311 million) in the six months ended June 30, compared with a profit of 220 million yuan a year earlier, Liaoning province-based Angang said today in an exchange filing, citing unaudited preliminary figures based on Chinese accounting standards. Angang had a loss of 2.4 billion yuan in the six months ended Dec. 31, according to data compiled by Bloomberg.
Weakening exports and China’s curbs on property have eroded steel demand and prices. The economy in the second quarter probably grew 7.8 percent from a year earlier, the slowest expansion in more than three years, according to the median forecast of 15 economists in a Bloomberg survey last month. China cut its benchmark interest rates yesterday as the government moves more aggressively to revive the economy.
Steel prices in the first half fell more than 12 percent from a year earlier, squeezing profits even as the company took measures to cut expenditure, Angang said in the statement. The average price of hot-rolled coils, a benchmark product, has fallen for 12 straight weeks, the longest streak since January 2003, based on Beijing Antaike Information Development Co.’s first available data.
Angang shares rose 1.1 percent to HK$4.49 today in Hong Kong, before the announcement, compared with a 0.04 percent drop in the benchmark Hang Seng Index. The stock has fallen 20 percent this year.
Angang was the first major Chinese steelmaker to report preliminary results. Aggregate profit at China’s steel industry dropped 57 percent in the first five months from a year ago, the China Iron and Steel Association said this week, without giving details.
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