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Steel maker reports 60% fall in profit because of the crisis

JINAN Iron and Steel Company, China's largest shipbuilding plate manufacturer, posted a 60.13-percent decline in its 2008 net profit as the financial crisis bit, according to its statement to the Shanghai Stock Exchange on Saturday.

Net profit stood at more than 780.6 million yuan (US$114.1 million) in 2008, down 60.13 percent from a year earlier. Earnings per share were about 0.55 yuan last year, down from 1.45 yuan in 2007.

The company blamed the financial crisis for the drop in profit, saying that the downturn had resulted in drastic contraction in both domestic and overseas demand for steel in 2008.

Slacking demand led to an increase in stockpiling and thus steel prices plunged, which eroded the company's profit.

The entire steel industry suffered from shrinking demand and falling steel prices last year. According to the country's iron and steel association, the aggregate net profit of 71 medium and large steel producers fell 43 percent to 84.6 billion yuan in 2008 as weak demand drove down prices, and 15 steel producers recorded full-year losses totaling 8.5 billion yuan.

Jinan Steel said that prospects for 2009 were not looking good in the face of the world economy and uncertainties over raw material prices.

Luo Bingsheng, executive deputy director of the country's iron and steel association, said last month that recovery for China's steel market was not yet in sight because of declining exports and excessive production capacity.


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