Shanghai-based Chinese steel colossus Baoshan Iron and Steel Corporation Ltd (Baosteel) has announced that in the first three quarters of 2010 it increased its net profit by 186.15 percent year on year to RMB 10.602 billion ($1.59 billion). However, in the third quarter Baosteel saw a 15.96 year-on-year decrease in its net profit to RMB 2.551 billion ($0.38 billion). In the third quarter, Baosteel produced 5.807 million mt of iron and 6.571 million mt of steel, while its total sales volume of steel products amounted to 6.183 million mt.
Commenting on its results, Baosteel said the growth of steel demand slowed down in the third quarter. The producer's capacity utilization and output of steel have been on a downward trend for six straight months. Steel prices in China had declined from the end of the second quarter this year, bottoming out in mid-July, followed by a gradual increase. In the meantime, quarterly iron ore contract prices were at peak levels for the current year in the third quarter. Thus, profitability in the domestic steel sector declined greatly in the third quarter as compared to the second quarter, Baosteel said.
Baosteel stated it expects that steel prices will lack momentum for an increase in the fourth quarter, while it also expects that a balance will be maintained between supply and demand for steel in the quarter in question.