Steel­mak­ers point to profit surge on rise in prices

China Daily (USA) - - BUSINESS - By BLOOMBERG in Shanghai

Two of China’s big­gest steel mills said their net in­come jumped in the third quar­ter, in a fur­ther sign that this year’s price re­bound has eased trou­bles for the world’s big­gest pro­ducer.

HeS­teel Co, the listed unit of China’s top steel­maker, ex­pects to post net in­come at the high­est level since 2010 on gains in prices, ac­cord­ing to a state­ment. Net in­come will be be­tween 453.7 mil­lion yuan ($67 mil­lion) and 606 mil­lion yuan, from 150.5 mil­lion yuan a year ear­lier. An­gang Steel Co, listed unit of the fourth-big­gest mill, ex­pects profit of about 677 mil­lion yuan, swing­ing from a loss of 1.03 bil­lion yuan a year ear­lier.

“Steel prices in the past three months have been quite good,” An­gus Chan, an­a­lyst at Bo­com In­ter­na­tional Hold­ings Co. Ltd, said by phone from Hong Kong. Prof­its at China’s steel­mak­ers could come un­der pres­sure in the fourth quar­ter from higher costs, he said.

Steel­mak­ers in the na­tion that ac­counts for about half of world out­put have en­joyed a bet­ter year af­ter stronger de­mand boosted prices and ex­panded profit mar­gins. Bench­mark steel re­bar on the Shanghai Fu­tures Ex­change av­er­aged the high­est of any quar­ter since the first three months of 2015 in July-Septem­ber. Global steel use will rise 0.5 per­cent this year, theWorld Steel As­so­ci­a­tion said this week, re­vers­ing an April fore­cast for an 0.8 per­cent drop af­ter China’s mar­ket re­bounded.

Hes­teel’s shares rose 0.3 per­cent to 3.09 yuan in Shanghai on Friday , while An­gang was up 0.2 per­cent to 4.48 yuan.

Steel prices have re­bounded since China re­turned from a week-long public hol­i­day at the start of October. Stronger do­mes­tic de­mand is di­vert­ing steel away from ex­port mar­kets and fu­el­ing higher iron ore im­ports, Daniel Hynes, se­nior com­modi­ties strate­gist at Aus­tralia & New Zealand Bank­ing Group Ltd., said in an e-mailed note.

Hes­teel said its ninemonth net in­come will be be­tween 862.7 mil­lion yuan and 1.01 bil­lion yuan, up from 507.5 mil­lion yuan a year ear­lier. An­gang ex­pects net in­come to rise to about 977 mil­lion yuan for the nine months, from a net loss of 888 bil­lion yuan a year ear­lier. An­gang and Hes­teel are due to re­port fi­nal thirdquar­ter earn­ings on Oct 26, af­ter Baoshan Iron & Steel Co, the No 2 pro­ducer, on Oct 24.

ex­pected profit in 2016 by An­gang Steel Co, a listed unit of An­steel Group Corp, China’s fourth-big­gest mill

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