SHANGHAI Aug 22 Baoshan Iron & Steel Co Ltd
(Baosteel), China's biggest listed steelmaker by
stock market value, posted a 14.8 percent fall in first-half net
profit, reflecting weak prices and slackening demand growth, the
company said on Friday.
Net profit dropped to 3.15 billion yuan ($512.1 million)
from 3.7 billion in the same period last year, the company said
in a filing to the Shanghai stock exchange. It did not provide
profit figures for the April-June quarter.
China's steel sector is facing its biggest challenges since
the global financial crisis of 2008, as mills deal with heavy
debt loads, chronic oversupply and mounting environmental
Beijing's move to rein in the construction sector, the main
driver of the country's steel consumption, as well as its shift
away from infrastructure investments, have also has caused
demand growth to slacken, casting doubts on the outlook for the
"In the face of severely difficult market conditions, the
company adapted to changes in market demand and proactively
optimised its product structure, working hard to improve its
manufacturing capabilities," the company said.
Based on its first-half results, Baosteel's profit in the
April to June quarter was 1.75 billion yuan, down 15.9 percent
from year ago and marking a second straight quarter of falling
profits, according to Reuters calculations.
Net profit in the first quarter fell 7.2 percent from year
ago to 1.5 billion yuan.
China's steel demand in the first six months of 2014 rose
just 0.4 percent from a year earlier to reach 376 million
tonnes, versus a 3 percent rise in actual production of 412
million tonnes, data from the steel association showed.
The burgeoning oversupply has caused Shanghai steel rebar
futures to drop nearly 20 percent so far this year and
has sent iron ore prices .IO62-CNI=SI down nearly a third to
as low as $89 a tonne.
The slump in steel prices has also hit a raft of other
Chinese mills, with Angang Steel posting a
18 percent drop in first-half profit and SGIS Songshan
swinging to a net loss of 736 million yuan, from a
net profit of 11 million last year.
($1 = 6.2530 Chinese Yuan)
(Reporting by Fayen Wong)