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PrintSHANGHAI(Reuters) - China's top steel maker, Baoshan Iron and Steel Co (600019.SS), reported a 6 billion yuan ($878.3 million) fourth-quarter net loss, as demand for its steel withered amid a global financial crisis.
The company also forecast a 27.4 percent drop in revenue this year to 145.7 billion yuan, with weak demand expected to continue.
China's steel industry, the world's biggest, suffered an overall loss in the fourth quarter, the country's industry group has said, as China's massive production capacity exceeded demand.
Baosteel, which competes with South Korea's POSCO (005490.KS) and Japan's Nippon Steel Corp (5401.T) to supply the Chinese market, earned 2008 net profit of 6.46 billion yuan, down by half from 12.72 billion yuan in 2007.
Earnings per share fell to 0.37 yuan from 0.73 yuan.
The full-year result was well below an average forecast for 11.15 billion yuan, or 0.62 yuan per share, from seven analysts polled by Reuters.
"China's steel makers are facing challenges from long-term excess capacity, tight supplies of raw materials and high operating costs," the company said in a statement.
Baosteel shares have risen 28 percent so far in 2009, in line with China's benchmark Shanghai Composite Index .SSEC.
Despite the slump in the market, Chinese steel makers were rushing back to full production after an uptick in steel prices in January and early February, bloating supplies and dampening market sentiment again.
POSCO has cut its steel output by 28 percent in the first quarter from a year ago and plans to cut supply further in the second quarter, the Korea Metal Journal reported on Friday. POSCO declined to comment on the report.
China plans to cap its crude steel output at 460 million tonnes this year and at around 500 million tonnes in 2010 as it tries to push the industry into shape.
It also aims to close 25 million tonnes of steelmaking capacity.
Baosteel said on Friday it planned to produce 24.9 million tonnes of crude steel in 2009, versus its current annual capacity of 26 million tonnes. It did not give a figure for 2008 crude steel output.
Global steel demand has slumped in the fallout from the economic crisis, forcing Chinese steel firms to seek shelter in construction projects backed by a $585 billion state stimulus package.
As part of a planned industry consolidation, Shanghai-headquartered Baosteel will take over 10th-ranked Baotou. ($1=6.831 Yuan)
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