Weak market hammers Daye Special Steel and Angang Steel

The slowdown in the mainland's steel industry reduced profit at Daye Special Steel, a Shenzhen-listed subsidiary of Citic Pacific, and created losses for Angang Steel, which is listed in Hong Kong.

Daye's net profit plunged 86.2 per cent to 18.05 million yuan (HK$22.4 million) in the third quarter. For the first three quarters, it dropped 53.9 per cent to 206.8 million yuan, Citic Pacific announced yesterday. Revenue fell 32.3 per cent in the quarter to 1.57 billion yuan.

"The special steel market was weak. The fall in steel prices was greater than the fall in raw material prices, which seriously affected the company's profits. There remain uncertainties over operations in the fourth quarter," Citic Pacific said.

Angang said it incurred a net loss of 1.19 billion yuan in the third quarter, a year-on-year drop of 6,384 per cent, while turnover fell 18.8 per cent to 19 billion yuan. For the first three quarters, it made a net loss of 3.17 billion yuan, a year-on-year fall of 1,426 per cent.

"The significant decrease in the operating profit, total profit and net profit was mainly attributable to the continuous depression of the steel market and a continuously low steel price this year, particularly since the third quarter when the steel price saw further significant fall. The deepening of the company's efforts in cost reduction and efficiency had yet to offset the loss in profit arising from the decrease in steel price," the company said.

In the first eight months of this year, profits in the steel sector dived 53.4 per cent to 82 billion yuan, the government said.