The extent of corrosion in the mainland steel sector should become clear this week as Angang Steel and Maanshan Iron & Steel are expected to announce dismal earnings for last year as prices collapsed amid an intensifying economic downturn.
The two heavyweight steelmakers could report that net profit plunged 39 and 47 per cent year on year respectively.
Investors are bracing for the worst after the mainland steel industry lost 47.7 billion yuan (HK$54.1 billion) in the fourth quarter last year.
The average forecast of 22 analysts polled by Thomson Reuters is a slide in Angang's net income to 4.62 billion yuan last year from 7.53 billion yuan in 2007. They expected revenue to have climbed to 75.84 billion yuan from 64.53 billion yuan.
Expectations for Maanshan Iron were not much different. Net profit may have plunged to 1.3 billion yuan from 2.47 billion yuan, the analysts estimated.
Angang will announce its results today and Maanshan Iron tomorrow.
'Apparent consumption in China's steel industry has seen the most deceleration of all the commodities as weak demand meets destocking,' Credit Suisse analysts including Trina Chen wrote last month.
