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Chinese steel giant Baosteel reports stellar quarter despite high coal prices

Chinese steel giant Baosteel reports stellar quarter despite high coal prices

FILE PHOTO: A labourer works at a cold-rolling mill of the Wuhan Iron & Steel Group on the outskirts of Wuhan, capital of central China's Hubei province August 22, 2006. REUTERS/Alfred Cheng Jin

BEIJING/HONG KONG :Chinese listed steel producer Baoshan Iron & Steel Co Ltd said on Friday its third-quarter net profit rose 68.6per cent on an annual basis, defying intensified pressure from production curbs and higher raw material prices.

The steel giant, known as Baosteel, pocketed 6.5 billion yuan (US$1.02 billion) during the July-September quarter, it said in a filing to the Shanghai Stock Exchange. That was down from 9.7 billion yuan it earned in the second quarter but still well above profits the company made in the same period of 2020.

"In the third quarter ... downstream demand like vehicles, home appliances and engineering machineries were relatively weak," Baosteel said, adding that growth in overseas demand slowed.

Meanwhile, China's steel production and energy consumption controls also weighed on the company's profitability together with rising coal prices, according to the company.

Prices for coking coal futures, a key steelmaking ingredient, on the Dalian Commodity Exchange, surged more than 80per cent in the third quarter triggered by a coal supply crunch, crippling the impact of falling iron ore prices, which were down 32per cent.

Baosteel said it had managed to overcome the difficulty by adjusting production strategy and cutting costs.

In the first three quarters, the steelmaker's net profit stood at 21.59 billion yuan, surging 174.5per cent from the Jan-Sept period in 2020, it said.

The company made 33.13 million tonnes of iron and 37.05 million tonnes of steel this year as of end-September, according to the filing.

(US$1 = 6.3912 Chinese yuan renminbi)

(Reporting by Min Zhang and Meg ShenEditing by David Goodman, Robert Birsel)

Source: Reuters

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