There was no good news for shareholders in steelmaker OneSteel Ltd at yesterday's AGM in Sydney.

The company's chairman, Peter Smedley told the meeting the company expects conditions for the Australian steel industry to remain challenging.

And CEO, Geoff Plummer confirmed the profit downgrade for the first half made at the start of November and said the company has already cut jobs, closed some of its steel mills for varying periods of time and was looking at permanent closures of unnamed plants.

He also said the job cuts -770 full time equivalent positions, and a further 310 by March next year - would cut labour costs by more than $60 million.

A sharp fall in global iron ore prices and a weakening in local demand drove OneSteel's downgrade of its first half profit outlook at the start of this month.

"The company has revised down its earnings expectations for November and December due to the recent collapse in iron ore prices, which are now around 30% below their levels three weeks ago of approximately $170 per tonne (62% Fe), and the impact of the increase in the Australian dollar over the same period," OneSteel said on November 2.

"OneSteel now expects Net Profit After Tax for the first half will be in the range of $55 million to $75 million (excluding transaction costs and stamp duty in relation to the acquisition of WPG Resources' iron ore assets of approximately $20 million)," the company told the ASX.

Yesterday Mr Plummer told the AGM that net after tax profit for the December half of this year was "expected to be in range of $55m - $75m".

He confirmed that earnings had been "adversely impacted by recent severe fall in iron ore prices, run up in the Australian dollar (AUD) and reduced steel sales."

And he told the meeting that a forecast for the June 30 year was not possible at this stage.

"Quantitative guidance is not appropriate for balance of FY12 at this time due to the high level of uncertainty around AUD, prices for iron ore and steel and the current uncertainty around the international economy and the level and nature of growth in the domestic economy."

Mr Smedley said the company is "expecting conditions to remain challenging for these businesses over the remainder of the financial year."

"We are making good progress with our cost and operational response to the difficult steel environment, as well as our steel product portfolio and facilities footprint review."

Mr Smedley said OneSteel was confident that demand and the pricing environment in Australian steel would improve as the Australian economy improved.

International steel was expected to become stronger as the outlook for economic growth in developed economies improved.

"Looking forward, we believe the fundamentals for strong demand from China remain sound and we have been encouraged with the recovery in iron ore prices from their recent lows over the last few weeks.

"We see no change to the positive outlook for our Mining Consumables segment due to continued strength in mining activity, which is underpinning strong demand in the Americas and Australasia.

"In Recycling, both our international and non-ferrous trading businesses were continuing to build on their improved performance in FY11, but a sharp fall in international prices from around September/October has made conditions more challenging.

"In Australian steel, we are currently not seeing any improvement in overall activity levels or demand, with increased international economic uncertainty weighing on confidence levels.

"We are expecting conditions to remain challenging for these businesses over the remainder of the financial year.

"We are making good progress with our cost and operational response to the difficult steel environment, as well as our steel product portfolio and facilities footprint review<" Mr Smedley said.

There was nothing before the OneSteel board that would prompt the company to consider raising further debt or equity, or which gave the company concern over its borrowing covenants, he added.

Mr Plumber said gave details of the cost cutting and plant changes and closures that have been made, or could be made, to cut costs in the steel business.

He said the company continued to make progress with initiatives to reduce cost base.

These included "Reduction of 770 FTEs to end October (includes 275 direct employees, reduced overtime, casual labour and contractors). Further labour reduction of 310 FTEs expected by end of March quarter. Estimated annualised savings of approx. $65m by end of March quarter.

In operations, OneSteel has cut the Laverton electric arc furnace plant in Melbourne to 3 shifts from 4 shifts and the Newcastle Rod Mill was reduced from 6 to 5 day operation at start of October.

The company has closed the Sydney electric arc furnace for 47 days, the Laverton bar mill in Melbourne for 25 days and the rod mill for 21 days and the Hot Dip Galvanising plant at Acacia Ridge was 'mothballed' in October.

He also said the company is "actively progressing a number of initiatives including closure of some operations, and divestments/rationalisation. Initiatives to date include: 8 Distribution branches closed (7 Metal and/Steel & Tube, 1 OneSteel Reinforcing)."

OneSteel shares fell 3.5c to 93.5c, a fall of 3.6%.