Oct. 26 (Bloomberg) -- Wuhan Iron & Steel Co., the listed unit of China’s third-biggest steelmaker, said full-year profit may drop more than 50 percent because of the global recession.

The company, based in the central Chinese city of Wuhan, didn’t give a figure in a statement to Shanghai’s stock exchange today. Wuhan Steel had net income of 5.19 billion yuan ($760 million) in 2008. Third-quarter profit fell 76 percent from a year ago to 546.6 million yuan, according to the statement.

Wuhan Steel is the first Chinese steelmaker to forecast a decline for full-year profit after domestic steel prices fell from a record set on June 5, 2008, as the recession slashed exports and domestic demand. Analysts including China Jianyin Investment Securities Co.’s Chu Xueliang expect Baoshan Iron & Steel Co. to follow suit before profits revive next year thanks to the government’s 4 trillion yuan stimulus package.

“Prices are under pressure due to overcapacity,” Chu said today by phone from Shenzhen today. “We expect the market to recover next year.”

Wuhan gained 0.5 percent to 7.99 yuan at 9:45 a.m. in Shanghai. The stock has risen 68 percent this year, compared with a 71 percent gain in the benchmark Shanghai Composite Index. The index gained 0.2 percent as of 9:45 a.m.

Steel prices in China averaged 3,891 yuan a ton in the third quarter this year, down 30 percent from 5,530 yuan in the corresponding quarter of a year earlier, according to Beijing Antaike Information Development Co. Prices reached 4,423 yuan, the highest this year, on Aug. 4.

Steel Prices

Prices probably won’t increase any more this because of overcapacity, Chairman Deng Qilin said Oct. 13. Deng is also the general manager of the parent company Wuhan Iron & Steel Group.

“Steel prices may have reached this year’s high in the third quarter,” said Zhao Zhicheng, analyst at Essence Securities Co. by phone from Shanghai today. “The slow growth in demand is not sufficient to boost prices this quarter.”

Sales fell 33 percent to 13.9 billion yuan in the third quarter from a year earlier, according to the statement. Profit for the first nine months of this year fell 85 percent to 1.05 billion yuan.

Wuhan Steel plans to raise as much as 12 billion yuan in a share sale to existing holders to buy 77.6 percent of Echeng Iron & Steel Group, a construction-steelmaker, a pellet plant and a powder smelting unit from its parent, to the company said in August.

--Helen Yuan, Jiang Jianguo, Xiao Yu. Editors: Andrew Hobbs, Keith Gosman

To contact the Bloomberg New Staff on this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

Last Updated: October 25, 2009 22:13 EDT