China's Baosteel Q1 net profit beats forecasts

SHANGHAI, April 28 (Reuters) - China's Baoshan Iron and Steel Co (600019.SS: Quote, Profile, Research, Stock Buzz) reported on Monday a 16 percent rise in first-quarter earnings, beating analysts' forecasts, after rising steel prices offset a surge in raw material costs.

Baosteel, which competes with Japan's Nippon Steel Corp (5401.T: Quote, Profile, Research, Stock Buzz) and South Korea's POSCO (005490.KS: Quote, Profile, Research, Stock Buzz) to supply China's market, posted a net profit of 4.26 billion yuan ($609 million), against 3.68 billion yuan a year earlier.

Five analysts from brokerages and fund management firms polled by Reuters had given a median forecast of 3.68 billion yuan.

Profits rebounded sharply from the October-December quarter, when earnings shrank to about 2.17 billion yuan because of weakness in the stainless steel market following a plunge in nickel prices.

Baosteel raised its major steel product prices as much as 8 percent for the first quarter of 2008, and then lifted second-quarter prices a further 17 to 20 percent.

Shares in Baosteel dived 29 percent in the first quarter of this year, but outperformed a 34 percent fall in the benchmark Shanghai Composite Index .SSEC. (Reporting by Alfred Cang; Editing by Jean Yoon and Andrew Torchia)