Steel producers post huge gains in net incomes
Baoshan Iron & Steel (Baosteel), the mainland's biggest steelmaker, and its rivals posted strong gains in first-quarter profits as they benefited from higher prices and increased output amid soaring demand.
Baosteel said net profit soared 156 per cent to 3.68 billion yuan in the three months to March, while Maanshan Iron & Steel posted an 80 per cent jump in earnings to 536 million yuan. Shanxi Taigang Stainless Steel said net profit surged 759 per cent to 1.23 billion yuan.
Among smaller steelmakers, Bengang Steel Plates said first-quarter net profit increased 207 per cent to 315 million yuan, Hangzhou Iron & Steel reported a 309 per cent surge to 69.8 million yuan and Fushun Special Steel recorded a 21 per cent rise to 6.2 million yuan.
Mainland steelmakers produced 22.3 per cent more crude steel year on year in the first quarter, at 114.7 million tonnes, according to the National Development and Reform Commission.
They exported 120 per cent more steel products at 14.13 million tonnes and 98 per cent more billet at 1.78 million tonnes.
Steel prices had strengthened further this year after a rebound in the four quarter last year, analysts said.
Prices have risen an average of 0.5 per cent so far this year and are expected to continue climbing until June, with some softening expected in the second half, says a CLSA report this week.
'With steel prices poised to remain strong through the second quarter, we can expect higher than expected profits for the first half,' the report said.
Shanxi Taigang's first-half profit was likely to jump as much as 250 per cent, the company said. Net profit for the same period last year was 676 million yuan. Baosteel and Hangzhou Steel forecast first-half profit increases of more than 50 per cent.
Baosteel, which supplies half of the metal used in mainland-made cars, raised prices in the second-quarter as much as 6.5 per cent for the three months from April 1, its first increase in three quarters.
Recent cuts in tax rebates on steel product exports would restrict steelmakers' earnings growth, especially those producers such as Baosteel and Angang Steel that have a higher proportion of overseas sales, analysts said.
Baosteel board secretary Chen Ying yesterday said the recent tax rebate adjustment would lead to a drop of almost one billion yuan in the company's income this year without considering other factors.
Strong gains stem from high prices and more output as demand grows
Shanxi Taigang Stainless Steel's net profit increase last year: 759%