Angang Steel Co., the biggest Hong Kong-traded steelmaker, swung to a first-quarter loss as iron ore costs gained and slowing economic growth in China dragged down prices.
Net loss was 1.89 billion ($300 million) for the three months ended March 31, compared with a profit of 71 million yuan a year earlier, the Anshan, Liaoning province-based company said today in a statement to the Shenzhen stock exchange, citing Chinese accounting standards. The loss matched its initial estimate announced on April 13.
Steelmakers in China, the world’s biggest producer, had combined losses of more than 1 billion yuan in the first quarter, the China Iron and Steel Association said. Weakening exports and government curbs on property slowed steel demand.
The shares fell 1.7 percent to close at HK$5.32 today in Hong Kong, compared with a 0.2 percent drop in the benchmark Hang Seng Index. The stock has fallen 4.8 percent this year.
The average Chinese price for hot-rolled coil, a benchmark product, fell for eight straight days to 4,346 yuan a ton today from 4,395 yuan on April 13, according to researcher Beijing Antaike Information Development Co.
Angang paid its parent Anshan Iron & Steel Group 7 percent more for iron ore during the quarter, compared with a year earlier, while average steel prices dropped 10 percent, UOB-Kay Hian Ltd. analyst Helen Lau said on April 13.
Angang said on April 17 it will buy iron ore from Anshan Iron at a 5 percent discount to the average spot price two months ago. The previous rate was based on average prices of the prior six months.
Iron ore prices remain “distorted” and have room to fall 10 percent to 20 percent, Chen Ming, Angang Steel’s vice chairman, said in Hong Kong on March 29.
Spot prices of 62 percent-iron ore arriving at China’s Tianjin port have gained 6.1 percent this year, according to the Steel Index. It fell 1 percent yesterday to $146.7 a ton.