Stock rises as Baosteel projects surge in profit
Shares in Baoshan Iron & Steel rose 4.17 per cent to 10.99 yuan yesterday after the nation's largest steel producer estimated that first-quarter net profit would jump more than 1.5 times on the back of higher product prices.
The projected net profit surge from 1.37 billion yuan in last year's first quarter was largely due to low product prices in that quarter, the company said in a statement to the Shanghai stock exchange.
'Since the start of this year the company has also improved its product mix and increased efforts to improve efficiency and cut costs,' Baosteel said.
Hot-rolled steel prices have rebounded by about a third since the first quarter of last year while that of cold-rolled steel jumped by about 20 per cent, according to a China Merchants Securities research report.
Baosteel and its international rivals have raised their second-quarter selling prices amid strong demand from sectors such as ship-building, cars and construction, as well as tighter market supply of high value-added products this year.
The mainland steel giant said last month it increased its term contract price for hot-rolled steel sheets for the second quarter by 5 per cent from the first quarter, and that of cold-rolled sheets by 7 per cent.
China Merchants forecast Baosteel's second-quarter net profit to grow more than 30 per cent from the first quarter due to the price increase. It also projected a 5 per cent growth in the company's full-year average selling prices on all products.
Baosteel's profit will probably rise 21.2 per cent this year to 15.77 billion yuan from last year, according to the mean estimate of 13 analysts polled by Thomson First Call.
The company last month posted a 2.7 per cent rise in last year's net profit to 13.01 billion yuan.
China's crude steel output will rise 10 per cent this year to 462 million tonnes after rising 18.48 per cent to 418.78 million tonnes last year, according to a forecast by the China Iron & Steel Association.
Meanwhile, the State Administration of Taxation yesterday announced cuts in value-added tax rebates on exports to 5 per cent from 8 per cent on cold-rolled products, while rebates on some other products will be abolished.
The mainland's projected crude steel production this year, in million tonnes 462
