Sims Metal Management has sunk to a $250 million half year loss after a big drop in sales volumes and lower prices for metals put a dent in all of its operations.
Sims, one of the world's largest metal recyclers, said a steep decline in ferrous and non-ferrous metal prices was putting pressure on volumes and margins.
Sims said China was producing too much steel amid declining domestic demand.
China was exporting the excess steel to the markets of many of Sims' traditional customers - Taiwan, South Korea and Thailand - which had significantly depressed demand for ferrous scrap metal globally.
Sims made a $250 million loss in the six months ended December 31, compared to a net profit of $74.5 million a year earlier.
The loss included impairment charges on goodwill and a joint-venture metals recycler in southern California totalling $172 million.
Sims said the deterioration in market conditions resulted in lower earnings for all business, but the drop in earnings was most significant in North America.
Sims derives 55 per cent of its revenue from metals and electronics recycling in North America.
"The company faced substantial market headwinds during the first half of fiscal 2016," chief executive Galdino Claro said.
"These near term challenges translated into weaker earnings across all our businesses."
Mr Claro said Sims responded quickly, cutting costs in the first half, which helped return the company to profitability in the second quarter.
Sims closed 10 underperforming facilities, mostly in the central region of North America, and axed 500 jobs.
It also accelerated initiatives to strengthen its supply chain and logistics and improve operations.
Conditions in the third quarter of the current financial year were as difficult as in the first quarter, Mr Claro said.
"Therefore, we expect earnings improvement in the second half of fiscal 2016 to be driven by internal initiatives and not external factors," he said.
Sims shares dropped $1.04, or 13.4 per cent, to $6.72.
LOWER METALS PRICES WEIGH ON SIMS
* Net loss of $250.1m, compared to profit of $74.5m
* Revenue down 28pct to $2.42b
* Unfranked dividend of 10 cents, down from full franked 16 cents
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