Sat, Nov 01, 2003 - Page 10 News List

China Steel profit increase bigger than Baoshan's

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China Steel Corp (中鋼), Taiwan's biggest steelmaker, reported a larger jump in third-quarter profit than Chinese rival Baoshan Iron & Steel Co (寶鋼) as traders in China bought more steel from overseas to take advantage of new import quotas.

China Steel's third-quarter profit surged 88 percent to NT$9.44 billion (US$278 million), while Baoshan's rose 17.8 percent to 1.5 billion yuan (US$181 million), the companies said yesterday.

Rising steel consumption in China prompted importers to act more quickly than in previous years to take advantage of import quotas issued in May, benefiting international producers.

"There was a bit of a rush starting close to mid-year after China set its import quota because traders wanted to make sure their orders were within the quota," said Xu Aihua, an analyst at China's Iron and Steel Industry Association.

Surging economic growth and industrial expansion in China, particularly among domestic automakers and construction companies, is helping China Steel, Nippon Steel Corp, Japan's largest steelmaker, and other producers boost overseas sales and profits.

China Steel, whose sales rose 29 percent to NT$33.7 billion in the third quarter, raised its full-year profit forecast to NT$36.3 billion from NT$29.2 billion announced in December because of surging Asian steel demand.

Net income rose to NT$9.44 billion (US$278 million) from NT$5.02 billion. Last year, the steelmaker had net income of NT$16.8 billion.

"There's a lot of growth in demand for high-end steel products, which China still depends on imports for," said Geoffrey Cheng, an analyst at Core Pacific-Yamaichi Hong Kong Ltd. "Traders in China are trying to build up inventories before the quota is used up."

China's steel imports rose 42 percent last year to 25 million tonnes, while consumption rose 26 percent to 196 million tonnes, according to data from Beijing Antaike Information Development Co, the information arm of China's metal industry associations.

Domestic steelmakers are also benefiting from rising consumption in China, which overtook the US last year to become the world's biggest producer of the metal. Angang New Steel Co's third-quarter net income rose by half and Maanshan Iron & Steel Co's profit surged eightfold.

Last month, Baoshan, China's biggest steelmaker, raised its sales forecast for this year to 42.4 billion yuan from 39.4 billion yuan.

That's up a quarter from sales of 33.9 billion yuan last year.

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