China Mills May Suffer Huge Loss in H1 - Report

BEIJING, July 23 -- Chinese listed steel firms may eye huge loss in the H1 based on the earnings forecasts released so far as the global recession cut demand and price notably.

    Totaling 26 listed steel mills have unveiled their H1 earnings report so far according to statistics of which 12 speculates profit falls while the remainder expects losses.

    According to forecasts, aggregate net profit for the 26 mills amounts to negative CNY 8.635 billion a massive drop of 124.55% from the CNY 35.178 billion of a year ago. Total loss of the mills posted at CNY 3.513 billion in the Q1 and worsened to CNY 5.121 billion in the Q2 off 45.77% on quarterly basis.

    According to the report, however the loss may be over estimated as the result was calculated by the maximum of the loss or falls forecasted by these mills while in fact their real profit might be a little better.

    Angang Steel Co Ltd speculates a loss of CNY 0-2.9 billion in the H1 the highest of the 26 mills compared with the net profit of CNY 5.98 billion in the same period of last year and CNY 8 million in the Q1 of this year. Besides Angang, Panzhihua New Steel & Vanadium Co Ltd, Bengang Steel Plates Co Ltd, Taigang Stainless Steel Co Ltd and Hunan Valin Steel Tube & Wire Co Ltd also predicted over CNY 100 million losses while Baoshan Iron & Steel Co Ltd and Handan Iron & Steel Co Ltd speculated sharp profit falls.

    Market analysts said however, the overall profit decline also brings in a perfect timing for steel consolidation especially for regional regrouping.

    Tangshan Iron & Steel Co Ltd is to consolidate Handan Iron & Steel Co and Chengde Xinxin Vanadium & Titanium in forms of stocks replacement while Panzhihua New Steel & Vanadium mulls to expand capital and shares holding in its three subsidiaries etc.

    (Source: China Securities Journal)