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Baosteel reveals US$878m loss in Q4

BAOSHAN Iron and Steel Co, China's top listed mill, posted a 6-billion-yuan (US$878 million) loss in the fourth quarter last year as prices fell sharply amid the global financial crisis.

For last year, net income tumbled 49.2 percent to 6.46 billion yuan, or 0.37 yuan a share, its second annual decline, according to the company's annual results released last night.

The global recession has reduced the demand for steel, of which China is the world's top producer, leading to slumping prices and overcapacity.

The entire Chinese steel sector was unprofitable in the past quarter as firms wrote down the value of inventories.

"The domestic steel market is entering a difficult time featuring low demand growth and low product prices," Baosteel said in a statement, adding that the global economy had yet to bottom out and the pricing trends for iron ore and fuels were still uncertain.

It forecast this year's sales would drop to 145.7 billion yuan from 200.6 billion yuan last year.

Domestic steel prices had fallen more than 50 percent by November from June's all-time high.

They rebounded between November and last month as traders restocked products betting that state stimulus measures would boost demand, before falling back earlier this month to November's level.

Baosteel was profitable in the first two months and probably will make money this month, a company official had said earlier.

Baosteel shares have risen 28 percent this year, in line with the 30-percent gain in the Shanghai Composite Index.

The company budgets 16.6 billion yuan in fixed asset investment this year, against 28.7 billion yuan it spent last year.

Shanghai-headquartered Baosteel said it planned to produce 24.9 million tons of crude steel this year, versus its current annual capacity of 26 million tons.

It did not give a figure for its crude steel output last year.


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