October 12, 2008

Baosteel 2007 profit dips on SS weakness

It is reported that Baoshan Iron and Steel Co China's top steel maker reported 3% fall in its net profit for last year, the first annual fall since 2001, and blamed weakness in the stainless steel market following a plunge in nickel prices. Baosteel earned a net profit of CNY 12.72 billion in 2007 against CNY 13.08 billion a year earlier.

For the October-December quarter, BaoSteel’s net profit shrank to about CNY 2.17 billion, the lowest for any quarter of 2007. In the fourth quarter of 2006, Baosteel earned about 3.92 billion yuan.

Baosteel's turnover for 2007 surged to CNY 191.56 billion from CNY 162.33 billion in 2006. But its stainless steel products business made a loss in 2007 as prices slumped following a tumble in the price of nickel. It said "Sales prices fell more steeply than the decrease in production costs during the plunge in nickel prices.’

Baosteel sold 22.6 million tonnes of steel products in 2007 up by 6.5% YoY including 9.17 million tonnes of hot rolled and 7.70 million tonnes of cold rolled.

Baosteel plans to produce 24.55 million tonnes of crude steel and sell 24.19 million tonnes of steel products in 2008, in order to achieve turnover of CNY 200 billion. But it acknowledged it faced major uncertainties by saying that "There are still uncertain factors in the steel market in the second half of 2008, because the impact of possible further price increases for raw materials and energy is unclear.”