Steelmaker Set to Be China’s No.1 Posts Biggest Profit Since ’12Bloomberg News
The listed unit of Baosteel Group Corp., the steelmaker that’s merging with a local rival to become China’s biggest, swung to its largest profit in more than four years in the third quarter, boosted by a rebound in prices in 2016 that’s aided producers worldwide.
Baoshan Iron & Steel Co., the first of the world’s top, publicly-traded steelmakers to declare earnings for the quarter to September, posted net income of 2.13 billion yuan ($315 million), from a loss of about 920 million yuan a year ago, the company said in a statement on Monday. That’s the Shanghai-based mill’s best quarterly performance since 2012. Revenue surged 34 percent to 55.5 billion yuan.
It also said it expects a 600 to 800 percent surge in 2016 net profit. Steel prices have rallied this year after China’s government aided demand with a credit-and-infrastructure splurge. The advance helped producers from Asia to Europe and the U.S. by resuscitating profit margins that’d been squeezed last year. State-owned Baosteel will become China’s largest mill, and the global No. 2 by output, when it takes over Wuhan Iron & Steel Group Corp. in a merger granted government approval this month.
“The steel market on the whole picked up in the third quarter,” Baoshan Steel said in the statement. “But the industry situation of supply exceeding demand still persists.”
Hesteel Co. Ltd., the listed unit of the group that’s still China’s top producer, will confirm third-quarter earnings Wednesday after saying this month it expects net income to be higher than any quarter since 2010. Posco, South Korea’s biggest, is due to report figures the same day, while Japan’s Nippon Steel & Sumitomo Metal Corp. will report next Monday.
Shares in Baoshan, which bottomed at 4.83 yuan in February, rebounded in Shanghai to 5.57 yuan on Monday. Hot-rolled coil, a benchmark product used in everything from buildings to cars and machinery, has surged more than 40 percent in 2016 on the Shanghai Futures Exchange, after a 33 percent slump in 2015. The results were announced after the close of trade.
— With assistance by Martin Ritchie