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August 19, 2009

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Angang sees return to profit

AFTER posting a lower loss in the first half of the year, Angang Steel Co said it will return to profit in the current quarter as demand has rebounded.

Net profit at China's second-largest steel mill by market value could be between 1.56 billion yuan (US$228.4 million) and 5.69 billion yuan for the three months ending September 30, according to calculations based on Angang's nine-month earnings forecast released on Monday.

The Anshan, Liaoning Province-based company posted a loss of 1.56 billion yuan in the first six months as the global financial crisis took a bite out of steel prices. It had forecast a first-half loss of as much as 2.99 billion yuan.

China's steel production rose to a record last month as a government stimulus package spurred demand from construction sector and car makers.

Steel prices in China have nearly doubled over the past three months, but they have fallen by about 20 percent over the past 10 days alone, Australian miner Fortescue Metals Group Ltd said on Monday.

Analysts remained positive over China's steel sector, saying the correction in steel prices could be over in the short term.

"Spot steel prices have been falling sharply, and a further 10 percent fall is possible," Bank of America Merrill Lynch analyst Colin Liang wrote in a note yesterday. "However, we have seen users starting to restock, and demand is still recovering."


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