November 21, 2008

Chinese steelmakers profit growth dives in first two months

According to statistics released by China Iron and Steel Association showed that the large and medium sized iron & steel enterprises in China reported a mere 20.4% profit growth in the January to February 2008 as compared to the hefty 408% YoY growth in January to February 2007.

CISA said that despite a combined profit of CNY 22.56 billion, more steelmakers reported losses in the first two months due to impacts of the snow havoc raging south China in January and early February and a substantial rise in the price of raw materials. It said that a total of eleven mainstream steelmakers reported losses in the January to February 2008 period, six more than the figure in the same previous period. Cumulative losses reached CNY 1.017 billion up a hefty CNY 929 million from the same previous period.

Analysts predict that listed steelmakers' profit growth is doomed to drop significant in the first quarter of this year over Q1'07, when the combined net profits of 30 listed iron and steel companies grew by 202.8%. Of the 13 iron and steel firms that have released their 2007 results so far, only Tangshan Iron & Steel Co reported a projected year on year first quarter net profit growth of between 50% and 100%.

CISA reported that mainstream steelmakers created a gross industrial output value of CNY 331.372 billion, up 35.07% YoY, while their total sales revenue reached CNY 359.033 billion up by 36.11% YoY.

It said that February's iron and steel industry gross output value and sales revenue, at CNY 163.892 billion and CNY 175.24 billion dropped by 0.93% MoM and 3.58% MoM. In terms of profit, mainstream steelmakers reported a profit of CNY 10.349 billion up 4.1% YoY and down by 13.87% MoM. Their pre tax income stood at CNY 20.53 billion in February up by 19.2% YoY and 5.41% MoM.