Steelmakers' earnings drop on weak demand

SHANGHAI: Most of the listed steel companies are expected to see sharp falls in 2008 full year earnings as the sector comes to terms with a slump in demand.

Nineteen of the 20 listed firms that have issued their preliminary earnings reports have estimated that they will incur steep losses with some of the companies expecting profits to fall nearly 50 percent over 2007. The only exception to this is Fushun Special Steel, which expects 2008 profits to increase 50 percent.

Analysts said the poor showing of the sector has more or less been to their expectations. Most of the mainland steel makers were caught unawared by the demand slump in the second half of 2008. The subsequent fall in the prices of a wide range of steel products forced most of the smelters to drastically write down the value of their huge inventories.