Angang Steel Co., the biggest Hong Kong-traded steelmaker, posted a wider second-half loss on waning demand and high raw-material costs.
Net loss was 1.93 billion yuan ($301 million) in the six months ended Dec. 31, compared with a loss of 713 million yuan a year earlier, according to Bloomberg calculations based on Angang Steel’s full-year earnings posted in Shenzhen yesterday. The company forecast a loss of 2.15 billion yuan for 2011 on Jan. 30, implying a second-half loss of 1.92 billion yuan.
China’s steelmakers, the biggest in the world, incurred an industrywide loss in the fourth quarter as high raw material costs and competition weighed on prices, the nation’s steel association said. Profit margins for mills fell to a record low of 0.43 percent in November as housing curbs and the withdrawal of stimulus measures for the automobile industry curbed demand.
Domestic demand for steel will ease in 2012 in part due to excessive capacity in the industry, and the global economy is unlikely to recover in the short term, the company said in its filing on the Shenzhen Stock Exchange website, adding it will cut costs this year.
Shares of Angang Steel climbed 4.4 percent to close at HK$4.99 in Hong Kong yesterday, before the earnings announcement. The stock has lost 12 percent this year.
Full-year net loss was 2.16 billion yuan, Angang Steel said, citing international accounting standards.
Chinese Premier Wen Jiabao set a 2012 growth target of 7.5 percent this month, compared with a goal of 8 percent over the past seven years. The change in pace is needed to change the structure of the nation’s expansion, Wen said.
That shift is slowing steel production, according to BHP Billiton Ltd., the world’s biggest supplier of the iron needed to produce the metal.
Maanshan Iron & Steel Co. and Nanjing Iron & Steel Co. said in January their 2011 profits fell by more than half.