CAP reports Q3 2012 net loss of $5.2m

Chile’s Compañía de Acero del Pacífico (CAP) has reported a net loss of $5.17 million for the third quarter of 2012, as a consequence of lower iron ore prices and the weakness in the global steel market, as well as increased local taxes.

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The loss compares with a net profit of $205.6 million a year earlier, CAP said in its third-quarter earnings report.

CAP’s wholly owned steel subsidiary, Compañía Siderúrgica Huachipato (CSH), sold 264,735 tonnes between July and September, down by 1% year-on-year.

The average sales price declined by 9.5%, from $891.87 per tonne to $807.24 per tonne.

“The international steel market continues to be weak, but the favourable economic conditions in Chile will maintain steel demand at good levels,” the CAP report said.

Sales at Novacero, the group’s steel processing division, fell by 5.5% year-on-year in the third quarter, totalling 95,000 tonnes.

Its average sales prices dropped by 7.4% to $1,146.85 per tonne.

Iron ore sales by CAP’s 75%-owned mining subsidiary Compañía Minera del Pacífico (CMP) declined by 27.9% in the third quarter compared with the corresponding period last year, reaching only 2.53 million tonnes.

This decrease was due to a brief slowdown in iron ore spot sales, as well as a delay in the docking of carriers at Chilean ports, according to CAP.

Average iron ore prices fell by 40.5% year-on-year in the third quarter to $100.15 per tonne, in response to pricing adjustments in the global market.

“Iron ore prices have started to recover, but haven’t reached early-2012 levels yet,” CAP said.

The company noted, however, that current market conditions in China – CMP’s major client – allowed the group to be optimistic about the start-up of its iron ore expansion projects in 2013, such as Valle del Huasco and Cerro Negro Norte.

Cerro Negro Norte is a 4 million-tpy greenfield iron ore operation, while Valle del Huasco’s iron ore capacity is expected to be increased by 2 million tpy.

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