Baosteel forecasts hard time for sector
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Baoshan Iron and Steel Co forecasts a challenging second half for the domestic industry, squeezed by lower product prices and higher production costs, in contrast to its blistering interim results.
Slowing domestic demand and a sharp fall in exports - following the removal of export tax rebates - will put pressure on domestic prices, Ma Guoqiang, the company's general manager, told an online briefing yesterday with investors.
"Profit in the second half for the domestic steel industry will slide from the first half," Ma warned.
Higher iron ore prices in the second half of this year will challenge Baosteel, which relies on imported ore for its needs, China Securities analyst Wang Zhe said.
The government curbs on the property sector had caused domestic steel prices to tumble 17 percent from April to mid-July. Though prices have since rebounded, Baosteel still predicted prices would fall in the fourth quarter from the current quarter.
Baosteel at the weekend said net profit in the first half rose 12-fold to 8.1 billion yuan on demand and steel prices. It forecast a 140-160 percent annual surge in net profit for the first nine months.
