Baoshan Profit Climbs to Highest in 5 Quarters on CostsBloomberg News
Baoshan Iron & Steel Co. posted its biggest profit in five quarters as China’s largest publicly-traded steelmaker benefited from raw material costs that fell faster than steel prices.
Net income climbed to 1.86 billion yuan ($304 million), or 0.11 yuan a share, in the three months ended Sept. 30 from 938.7 million yuan, or 0.06 yuan, a year earlier, Shanghai-based Baoshan Steel said today in an exchange filing. Sales fell to 46.1 billion yuan from 46.2 billion yuan.
Steelmakers are gaining from a drop in iron ore costs after increasing supplies from miners including Rio Tinto Group and Vale SA spurred a global glut. China’s economy grew 7.3 percent in the third quarter, the slowest expansion since the first quarter of 2009, indicating weakening steel demand.
“Steel demand is staying at low levels as pressure on the economy still exists,” the company said in the statement. A domestic steel-price index fell 14 percent in third quarter from a year ago, while the Platts iron ore index dropped 41 percent, Baoshan said..
Baoshan Steel added 0.9 percent to close at 4.36 yuan in Shanghai today before the earnings announcement. The stock has gained 7.1 percent in the past year, lagging an 11 percent gain in the benchmark Shanghai Composite Index.
The result compares with a fourfold jump in third-quarter earnings at Hebei Iron & Steel Co., the listed unit of China’s biggest steelmaker. Angang Steel Co., the largest Hong Kong-traded mill, reported a fivefold jump in quarterly profit.
Profitability at Chinese mills may have peaked, according to Bloomberg Intelligence, as the drop in the steel prices accelerates amid slowing demand.
— With assistance by Helen Yuan