Kai Yuan Holdings (HKG:1215) has warned that it expects a significant increase in loss for the year ended 31 December 2011, as compared to the loss for the year of 2010, principally due to share of loss from the group's associates engaged in steel manufacturing and trading in the PRC as the result of the downturn of steel market and increase in prices of raw materials as well as other production costs, in particular in the fourth quarter of 2011.