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PrintNineteen Chinese steel companies listed on the domestic stock market have estimated poor performance for 2008, according to the latest survey by China Securities Journal.
The survey on 32 steel companies shows that 20 ones including the 19 ones mentioned have published business performance guidance for 2008.
Industrial analysts reckon that the congregate downcast reports were triggered by sharp reduction in steel price, stagnant prices for raw materials, losses in assets devaluation, shrinking demand from downstream industrial sectors, and natural disasters in southwestern China in earlier 2008.
Steel enterprises' performance set historical high in the first half of 2008, but dropped significantly in the rest of the year. Five firms predicted annual loss.
One example was Panzhihua New Steel & Vanadium, which expected its losses at 430 million yuan, a reversal from profit in the previous year. Another example was Pangang Group Sichuan Changcheng Special Steel (000569.SZ) with estimated losses of 350 million yuan, also from profit in the preceding year.
Enterprises such as Angang Steel and Shanxi Taigang Stainless forecasted profits for 2008 the same as in the previous year despite production drop,
Angang Steel, one of China's leading steel manufacturers, predicted net profit of around 3.42 billion yuan in 2008, down about 55 percent on year.
The company's net profit in the first three quarters of 2008 reached 2.44 billion yuan, 3.54 billion yuan, and 2.27 billion yuan, respectively. However, it lost 4.83 billion yuan in the fourth quarter.
Shanxi Taigang Stainless, another steel giant of China, expected net profit of some 1.2 billion yuan in 2008, dropping about 72 percent on year, while its net profit in 2007 achieved 4.248 billion yuan.
The company said that, due to sluggish market demand, economic recession on the overseas market, and the influence caused by foreign exchange rate, its profitability fell considerably.
Among a throng of downcast expectations, Fushun Special Steel's forecast that its 2008 annual net profit would increase more than 50 percent on year.
The steel manufacturer said that, as it adjusted production structure last year, both the output and sales volume of its high value added products increased.
However, an industrial analyst reckons that, considering the particularity of products produced by Fushun Special Steel, its profit cannot represent the industry's real condition.
Sources: (www.chinamining.org)
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