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Delong expects revenue hit from prolonged halt in production

DELONG Holdings, a Chinese steel manufacturer, on Tuesday said it expects a fall in the group's revenue on a shutdown of two blast furnaces at its indirect wholly owned subsidiary.

It said revenue will be reduced by about 696 million yuan (S$141 million) and 1.49 billion yuan in fiscal 2017 and fiscal 2018 respectively, due to the fall in production at its unit, Delong Steel.

One of Delong Steel's blast furnace - which has an annual production capacity of 920,000 tonnes - was shut down on Dec 1, 2017. The production halt is expected to continue until March 31, 2018.

Another one of Delong Steel's blast furnace, which is currently under maintenance and was scheduled to commence operations in mid-December 2017, will be required to stop production.

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The plants were shut to comply with Xingtai City's policies on air pollution in autumn and winter. As a result, the group's production capacity is expected to be reduced by approximately 232,000 tonnes in the financial year ending Dec 31, 2017, and 498,000 tonnes in the financial year ending Dec 31, 2018.

These represent 6.7 per cent and 17.4 per cent of the estimated capacity for fiscal 2017 and fiscal 2018 respectively.