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Baosteel, China’s top steel maker, beat forecasts with a 54-percent surge in third-quarter earnings, its strongest rise in five quarters, as resurgent prices helped it weather the impact of high raw material costs.
But Baosteel, which vies with POSCO and Nippon Steel to supply the world’s seventh-largest economy, could see profit growth slow to 15-20 percent in 2004 versus 2003’s 63 percent, as iron and coal costs squeeze margins.
Baoshan Iron and Steel Corp., preparing to raise an estimated US$3.7 billion in China’s biggest share sale, is seen as a barometer for the world’s top steel market, which swallows a quarter of global output.
Industry experts see demand for steel growing at 15 percent this year, slowing from 28 percent in 2003, when China imported 43 million tons of steel — equal to Germany’s annual output.
“This year the State announced a policy of macro-economic adjustment in the face of overheated investment in some sectors and overly fast loan growth,” the company said in a statement.
Baosteel’s July-September net profit rose to 2.34 billion yuan (US$282.7 million) from 1.52 billion yuan a year ago, beating forecasts for 1.83 billion yuan.
South Korea’s POSCO doubled its third-quarter net profit earlier this month and signaled a stronger fourth-quarter growth by raising its 2004 forecasts.
On Thursday, Nippon Steel said its first-half profit more than doubled, putting it on track for record annual earnings as robust worldwide demand, led by China, boosted steel prices.
Baosteel’s third-quarter result followed a disappointing 7 percent rise in net income in the second quarter amid China’s cool-down policies.
(Shenzhen Daily November 1, 2004)
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