SHANGHAI, April 29 (Reuters) - Baoshan Iron & Steel Co Ltd (Baosteel), China’s biggest listed steelmaker by market value, posted a 7.2 percent fall in its first-quarter net profit due to a weak economy and over-capacity, the company said on Tuesday.
Baosteel’s net profit was 1.5 billion yuan ($240 million), compared with 1.63 billion yuan for the same period last year, the company said in a filing to the Shanghai stock exchange.
“In the first quarter of 2014, although the iron and steel sector is traditionally in its busy season, because China’s macro-economy was still weak, the steel market faced further worsening over-capacity in production,” the company said.
China’s steel sector is facing its biggest challenges since the global financial crisis of 2008 as mills deal with heavy debt loads, weak demand growth, chronic oversupply and mounting environmental protection costs.
Beijing is aiming to restructure its bloated industries and has shifted its economic growth emphasis away from heavy investment, a reform that will rein in steel demand growth.
China’s big steel mills have incurred losses of 2.33 billion yuan in the first quarter and their financing costs rose 22.2 percent from a year ago, the China Iron & Steel Association said on Monday.
Shanghai steel rebar futures have lost 12 percent so far this year, dragging down iron ore prices .IO62-CNI=SI by 14 percent this year.
Wuhan Iron & Steel, one of the biggest steel producers in China, reported a 21.5 percent fall in first-quarter net profit, it said on Monday.
$1 = 6.2530 Chinese Yuan Reporting by Ruby Lian and Ben Blanchard; Editing by Matt Driskill and Mark Potter