Baosteel Q3 net profit down almost 50 percent from Q2

Thursday, 30 October 2008 13:27:10 (GMT+3)   |  
       

SteelOrbis Shanghai

According to the third quarter results released by giant Chinese steelmaker Baosteel, despite the year-on-year growth of net profit in the January-September period, the company's third quarter net profit has fallen by almost 50 percent compared with the second quarter of this year. In addition, Baosteel states that it expects to register losses on its carbon and stainless steel products in the fourth quarter of this year due to slumping prices.

Baosteel's third quarter net profit rose 19.15 percent year on year to RMB 2.846 billion ($417 million), down 47 percent quarter on quarter. However, the company posted a January-September net profit of RMB 12.491 billion ($1.832 billion), up 19.15 percent compared with the same period a year earlier.

Baosteel said that, in the third quarter, due to the global economic slowdown, the export downturn, the severe fall in demand from downstream sectors and the gradual release of newly-added domestic steel capacity, there has been an obvious change in the supply and demand relationship in the domestic market, causing steel prices to move on a downward trend. In addition, the rise in iron ore costs in the third quarter further increased the pressure on the company. Thus, the third quarter profit on carbon steel products posted a dramatic decline compared with the second quarter. Furthermore, Baosteel also suffered losses on its stainless steel products in the third quarter because of the sharp drop in prices.

Baosteel pointed out that, as prices continue to slide down, the difficult operating situation as regards stainless steel products is not expected to ease in the fourth quarter. Meanwhile, with the sharp downward trend in prices in the fourth quarter, carbon steel products are expected to suffer a loss.


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