Baosteel pessimistic about prospects
By Richard Fu |
October 31, 2012, Wednesday
|
Print Edition
Print Edition
BAOSHAN Iron & Steel Co is not optimistic about prospects through the first quarter of 2013 due to rising production costs.
Ma Guoqiang, general manager of Baosteel, said yesterday although steel prices have started to stabilize, margins will be squeezed by rebounding iron ore and coal prices.
China's largest listed steel mill on Monday reported a better-than-expected 4.9 percent drop in third-quarter earnings as a slowing economy eroded demand from shipbuilders and automakers.
"Despite this cautious guidance, we remain optimistic of a fourth-quarter profit rebound as indicated by spot steel price spreads," JP Morgan analysts wrote in a note.
Ma also said business will be hurt in the short term as a result of Japanese automakers lowering production and falling exports to Japan amid a territorial dispute between the two nations.
Baosteel also said on Monday it will sell its Luojing plant in north Shanghai to its parent firm after suspending production at the site in September to avoid further losses. The Luojing plant, which has higher costs because of the advanced green technology used, will be moved to Xinjiang.
Baosteel will also acquire a 12.8 percent stake in China's third west-to-east pipeline for 8 billion yuan (US$1.3 billion). PetroChina, the majority shareholder, began construction on it earlier this month.
Ma Guoqiang, general manager of Baosteel, said yesterday although steel prices have started to stabilize, margins will be squeezed by rebounding iron ore and coal prices.
China's largest listed steel mill on Monday reported a better-than-expected 4.9 percent drop in third-quarter earnings as a slowing economy eroded demand from shipbuilders and automakers.
"Despite this cautious guidance, we remain optimistic of a fourth-quarter profit rebound as indicated by spot steel price spreads," JP Morgan analysts wrote in a note.
Ma also said business will be hurt in the short term as a result of Japanese automakers lowering production and falling exports to Japan amid a territorial dispute between the two nations.
Baosteel also said on Monday it will sell its Luojing plant in north Shanghai to its parent firm after suspending production at the site in September to avoid further losses. The Luojing plant, which has higher costs because of the advanced green technology used, will be moved to Xinjiang.
Baosteel will also acquire a 12.8 percent stake in China's third west-to-east pipeline for 8 billion yuan (US$1.3 billion). PetroChina, the majority shareholder, began construction on it earlier this month.
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