CSC Steel Holdings Bhd has recorded a lower pre-tax profit of RM2.39 million for the third-quarter ended September 30, 2010 compared with RM53.605 million registered in the same period last year.

In a filing to Bursa Malaysia, the company said revenue also declined to RM192.670 million from RM261.482 million previously due to lower sales and sluggish demand..

The company attributed the lower pre-tax profit to lower sales and high cost of raw materials which necessitated a write-down of inventories of about RM10 million to net realisable value.

The steel market was sluggish for the most part of the third-quarter due to high inventory and an over supply situation in China and Malaysia's steel market was not spared, it said.

However, the company said the steel market began to recover in early September due mainly to China's energy conservation policy whereby most of the energy hungry industries were required to reduce production.

'We believe that China's on going energy conservation campaign will keep its steel output at a relatively low level for the rest of the year,' the company said.

It said the anticipated short supply of steel has attracted some early interest in re-stocking activities.

Unfortunately, the actual real demand has yet to show much improvement due to the economic slowdown in China and slow and choppy recovery in the United States and Europe.

In addition, prices have remained weak due to the influx of imports being dumped into Malaysia.

'We expect steel market to remain volatile and challenging. Barring any foreseen circumstances, the group is cautiously optimistic of achieving profitability for the rest of the year,' it added.

-- BERNAMA