China's 77 largest steelmakers reported a combined ¥1.03 billion loss for the first quarter of 2012, standing in stark contrast to a ¥15.8 billion profit in the same period a year ago, the China Iron & Steel Association said.

The mills produced ¥785.07 billion worth of products and sold ¥863.89 billion worth of products between January and March, up 0.2% and down 1% respectively year on year, according to the association.

The good news is that in March alone the 77 firms reaped a combined ¥2.48 billion profit, offsetting a ¥2.8 loss for the first two months of this year, the association added.

The association asked the steelmakers to cut expenses and try to at least break even for the first half of this year.

China's crude steel consumption was up less than 1% to 165 million tons in the first quarter.

The struggling steelmakers will not be financially better off in the short run, and more mergers, acquisitions, restructurings and bankruptcies could be expected in the industry, Zhang Changfu, deputy director of the association, warned in March.

China imported iron ore at an average price of $136.4 per ton in the first two months of 2012, down 12.9% from the same period a year ago. However, a mining tax set to take effect on July 1 in Australia, which contributes 40% of China's iron ore purchases, is raising the specter of pricier iron ore again.

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