- Mill benefits from steel price rally and cost cutting
- CISA members post surge in profits in first five months
Angang Steel Co. shares rose to their highest in more than two months after it forecast net profit could nearly double in the first half, as the steelmaker slashed costs and benefited from improving margins.
Net income may rise by 94 percent from a year ago to 300 million yuan ($45 million) in the six months through June, Angang said in a statement Thursday. Its Hong Kong-listed stock gained as much as 5.5 percent to HK$3.84, its highest since late April, before trading at HK$3.72 at 11:12 a.m. local time. Its shares in Shenzhen rose as much as 1.3 percent. Other large Chinese steelmakers fell.
Profits were lifted by a rally in China’s steel market that peaked in April. Member companies of the China Iron and Steel Association made 8.7 billion yuan in profit in the first five months, an eight-fold increase from a year earlier as steel prices outpaced the cost of iron ore, according to China’s state-run news agency Xinhua.
“Angang’s profit increase is partly due to the improved margin in the whole industry, and partly thanks to its own effort in actively slashing costs, reducing expenses and improving efficiency,” according to a report by Zhongtai Securities Co.
Angang, the biggest mill in the northeast of China and one of three steelmakers directly controlled by the central government, said it adjusted its product mix and lowered procurement and other costs in the first six months, according to its statement.
The company’s forecast result marks a dramatic turnaround from the prior six months, which saw a loss of 4.7 billion yuan as prices slumped amid oversupply and weak demand in the world’s largest producer and consumer of steel. Angang reports earnings on Aug. 15.
— With assistance by Feiwen Rong