Oct. 21 (Bloomberg) -- Maanshan Iron & Steel Co., China’s second-biggest Hong Kong-traded steelmaker, said third-quarter profit fell 99.6 percent because demand slowed and high prices of raw materials eroded margins.
Net income dropped to 3.04 million yuan ($460,000), or 0.0004 yuan a share, from 802.3 million yuan, or 0.10 yuan, a year ago, the Maanshan, Anhui province-based company said in a Shanghai stock exchange filing today, citing Chinese accounting standards. Sales rose 18 percent to 16.99 billion yuan.
Steel prices in China fell as much as 17 percent from April to July as the government introduced measures to curb property speculation. Chinese mills face a “difficult” second half, Xu Lejiang, chairman of Baosteel Group Corp., China’s second-biggest steelmaker, said on May 9.
Maanshan rose 1.3 percent HK$4.86 in Hong Kong trading today, compared with a 0.4 percent gain in the Hang Seng Index. The stock has fallen 14 percent this year, compared with the benchmark’s 8.1 percent increase.
Chinese steel prices fell 17 percent to 3,888 yuan a ton on July 14 from 4,698 yuan on April 15, according to Beijing Antaike Information Development Co.
Angang Steel Co., the biggest Chinese steelmaker traded in Hong Kong, may post a third-quarter net loss after prices fell and raw-material prices gained, according to figures derived from the company’s nine-month profit projection in August. That would be a loss for the first time in five quarters.
Rio Tinto Group and BHP Billiton Ltd., two of the world’s largest iron ore suppliers, demanded a 22 percent increase in third-quarter iron ore prices, according to UC361.com analyst Hu Kai. For the fourth quarter, Rio Tinto, Sumitomo Metal Industries Ltd. and Kobe Steel Ltd., Japan’s third- and fourth-largest steelmakers, settled on a 13 percent price cut, the first decline in three quarters, Sumitomo said Sept. 8.
Rio Tinto and BHP Billiton Ltd. this year dropped a custom of setting annual prices for steelmaking commodities in favor of quarterly agreements.
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