Increasing domestic supply and sluggish overseas demand drove down H share Angang New Steel's net profit by 12 per cent in the first half to June 30. The SAR-listed flagship of China's largest steel-maker posted a net profit of 197.26 million yuan (about HK$184.83 million), down from 224.26 million yuan for the same period last year. Turnover rose 9.69 per cent to 4.73 billion yuan from 4.31 billion yuan. Operating profit fell to 320.14 million yuan from 326.91 million yuan. The company's share price slipped 4.12 per cent to close at 93 HK cents yesterday in the wake of the result, released on Monday evening. The company said domestic demand for iron and steel was great in the period and consumption of steel products showed stable growth. 'But the vibrant market led to a substantial increase in supply and intense competition,' it said. Diluted earnings per share were 6.7 fen, down from 8.5 fen in the same period last year. No interim dividend will be paid. The regional economic recovery that boosted Angang's exports in the first half last year was missing this year, and the global economic slow-down caused international demand for iron and steel to shrink. Angang was forced to cut product prices by an average 7.32 per cent year-on-year. Market sources said domestic steel prices also slumped in the first half. Beijing has tried to contain the volume of national output to clear the glut of low-grade steel products. It has also planned to shift domestic manufacturers to the production of high-quality products to satisfy growing domestic demand. Angang answered the call in February by striking a deal with German steel giant, Thyssen Stahl, to build a US$60 million galvanised steel plant.