Only seven out of 17 listed steel mills that unveiled interim earnings projections expect increased profits for the first half of the year, indicating a challenging outlook for the sector. As of Friday, 17 steel companies had released their forecast for preliminary earnings.

Three expected a drop in profits, six anticipated extended losses and seven companies predicted increased profits, the Securities News Journal reported on Monday.

Angang Steel, the listed arm of Anshan Iron and Steel Group Corp, expected a 702 million yuan ($114 million) profit from January to June. This contrasted sharply with a 1.98 billion yuan loss booked in the same period last year.

But insiders said the profit was because of an asset swap with its parent group and a readjustment of the depreciation period for fixed assets. In other words, the core business was not responsible for the profit.

The industrial slowdown forced many steelmakers to sell assets. In 2012, Baoshan Iron and Steel sold its stainless steel sector to parent Baosteel Group, leading to a surge in its net profits.