Sat, Oct 15, 2016 - Page 12 News List

Top Chinese steelmakers’ profits surge as prices rise

Bloomberg

Two of China’s biggest steel mills said their net income jumped in the third quarter, in a further sign that this year’s price rebound has eased troubles for the world’s biggest steel producer.

Hesteel Group Co (河鋼集團), the listed unit of China’s top steelmaker, expects to post net income at the highest level since 2010 on gains in prices, according to a statement.

Net income is to be between 453.7 million yuan (US$67 million) and 606 million yuan, from 150.5 million yuan a year earlier.

Angang Steel Co (鞍鋼), listed unit of the fourth-biggest mill, expects profit of about 677 million yuan, swinging from a loss of 1.03 billion yuan a year earlier.

“Steel prices in the past three months have been quite good,” Bocom International Holdings Co Ltd (交銀國際控股) analyst Angus Chan (陳慶) said by telephone from Hong Kong.

Profits at China’s steelmakers could come under pressure in the fourth quarter from higher costs, he said.

Steelmakers in the nation that accounts for about half of world output have enjoyed a better year after stronger demand boosted prices and expanded profit margins.

Benchmark steel rebar on the Shanghai Futures Exchange averaged the highest of any quarter since the first three months of last year in the July-to-September period.

Global steel use will rise 0.5 percent this year, the World Steel Association said this week, reversing an April forecast for an 0.8 percent drop after China’s market rebounded.

Steel prices have rebounded since China returned from a week-long public holiday at the start of this month.

Stronger domestic demand is diverting steel away from export markets and fueling higher iron ore imports, Australia & New Zealand Banking Group Ltd senior commodities strategist Daniel Hynes said in an e-mailed note.

Hesteel said its nine-month net income will be between 862.7 million yuan and 1.01 billion yuan, up from 507.5 million yuan a year earlier.

Angang expects net income of about 977 million yuan for the first nine months, from a net loss of 888 billion yuan a year earlier.

Angang and Hesteel are due to report final third-quarter earnings on Oct. 26, after Baoshan Iron & Steel Co (寶鋼), the No. 2 producer, on Oct. 24.

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