Wealthy smelter

Baos­teel Group pre­dicts up to eight­fold profit growth

China Daily (USA) - - FRONT PAGE - By YANG ZI­MAN andWUYONG Con­tact the writ­ers through yangz­i­man@ chi­nadaily.com.cn

Baos­teel Group, the largest steel smelter in China by out­put, has pre­dicted yearly profit growth of six to eight fold this year.

The com­pany reg­is­tered 8.1 bil­lion yuan ($1.2 bil­lion) of prof­its in the first three quar­ters, up 174.6 per­cent from the same pe­riod last year, ac­cord­ing to its profit state­ment re­leased onMon­day.

It at­trib­uted the huge growth to its strong ef­forts in cost re­duc­tion, mar­ket ex­pan­sion and port­fo­lio op­ti­miza­tion.

Yet, it also warned that ca­pac­ity re­duc­tion still had a long way to go for the whole in­dus­try.

In the first eight months, China’s steel in­dus­try achieved 21.5 bil­lion yuan in net profit, up 39.4 bil­lion yuan from net losses last year, dur­ing the same pe­riod.

The av­er­age price of the four ma­jor iron and steel prod­ucts (wire, de­formed steel bars, medi­umplates and cold-rolled sheets) was 2,931 yuan per ton, up 685 yuan, or 30.5 per­cent, from year.

The boom­ing real es­tate busi­ness and ris­ing fuel costs were the main rea­sons for the steel price in­crease, said Liu Xin­wei, steel an­a­lyst with Shan­dong-based bulk com­mod­ity in­for­ma­tion com­pany Sub­lime China In­for­ma­tion Group Co Ltd.

“Steel prices the be­gin­ning are of this mainly af­fected by costs. The coke prices have been ris­ing, driv­ing up the steel prices. More­over, the fast de­vel­op­ing real es­tate and a short­age of steel stocks have fur­ther driven up the prices,” said Liu.

The profit out­look of An­steel Group Corp, based in Liaon­ing prov­ince, shows that the com­pany is ex­pected to achieve earn­ings of 977 mil­lion yuan, turn­ing around from to­tal losses of 888 mil­lion yuan in the same pe­riod last year.

The pub­lic­ity of­fice of An­steel said that the com­pany has not­beenas­signedany­goals of ca­pac­ity re­duc­tion be­cause its pro­duc­tiv­ity has been very good.

Baos­teel saw­its stock price at Shang­hai Stock Ex­change up 0.12 per­cent to 5.69 yuan per share on Tues­day.

An­steel’s shares rose to 4.63 yuan­per share, up0.07 per­cent, on Tues­day.

Liu said that there won’t be a sig­nif­i­cant in­crease in steel prices for the rest of the year.

LIU DE­BIN / FOR CHINA DAILY

A worker checks the qual­ity of stain­less steel wire at a steel com­pany in Dalian, Liaon­ing prov­ince.

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