Although domestic and regional economic pressures were hitting performance, the figure marked a 260-million yuan reduction in losses for the industry, the newspaper said. It did not say whether that figure represented an annual or a sequential comparison.

China's metals industry underwent a streamlining phase earlier this year which saw several key mergers and the sacking of late Chinese patriarch Deng Xiaoping's son-in-law as head of what used to be one of the industry's leading companies.

"The sectors efforts to bail out loss-making companies are now showing clear results," the China Daily said.

But the industry is saddled by Asias economic woes. Specifically, the article faulted falling prices for steel products compounded by rising energycosts.

Steel product prices fell by 170 yuan per tonne on average in the first half, a 5.5 per cent decrease from 1997, the report quoted figures from the State Bureau of the Metallurgical Industry as showing.

Rising prices of coal and electricity added 1.2 billion yuan to production costs, the newspaper said.

Asias Financial turmoil also caused exports to sag to 2.5 million tonnes in the first half -- a 32.4 per cent drop from a year earlier.

In addition, transportation price hikes last April would likely cut into revenues by 3.0 billion yuan, spoiling the industrys goal of 2.5 billion yuan in net profits for 1998, the report forecast.

China produced 57.25 million tonnes of iron and 55.22 million tonnes of steel, including 49.61 million tonnes of steel plates, in the first half of 1998, it said.