Chinese steelmakers’ profits plunged by 96 per cent in the first half compared with a year ago, a Chinese official said yesterday, as the economic slowdown turned the industry into a “disaster zone”.

Zhu Jimin, chairman of the China Iron and Steel Association, said in a speech posted on the association’s website that the aggregate profit of the nation’s steelmakers fell to Rmb2.39bn ($379m) in the first half year due to falling demand and rising costs.

Chinese companies have issued profit warnings as the slight downturn in economic growth has had a disproportionate effect on profits. The China Securities Journal, an official newspaper, described the steel industry as the “main disaster zone” in the downturn, with 80 per cent of listed steel producers warning that their results will be worse than forecast.