Delong Holdings, which put hundreds of workers on unpaid leave last October and shut several furnaces in China, yesterday said it will be reporting a loss for the full year ended Dec 31, 2008. The profit warning came as the global financial crisis hit China's steel demand in the latter half of 2008. The Singapore-listed Chinese steel company said given the slower demand, the group had moved decisively in October 2008 to scale down production at four of its smaller blast furnaces to reduce costs. The four furnances account for about 30 per cent of the group's annual production.

'However, higher raw material prices coupled with the writedown of inventory to net realisable value in 4Q2008, offset the cost savings and contributed to the group's FY2008 loss,' it said in a statement to the Singapore Exchange. Delong's board assured shareholders that despite the tighter operating environment, it has sufficient financial resources to meet its working capital requirements. 'The group has existing secured and unsecured credit facilities with various domestic and foreign financial institutions which can be called upon if any such need arises,' Delong said. As at end-September 2008, Delong's cash and cash equivalent stood at S$139.49 million, down from S$291.16 million a year earlier. Delong said yesterday that it remains confident about the long-term potential of China's steel industry.