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Baosteel's new sector turns in a profit

BAOSHAN Iron and Steel Co yesterday said its oriented silicon steel segment, newly commissioned last year, made a profit of 120 million yuan (US$18 million) in 2008.

Baosteel President Fu Zhongzhe released the profitable news during an online briefing with investors and said the steel firm plans to sell 60,000 tons of the product this year, against an estimated more than 300,000 tons for Wuhan Iron and Steel Co, which leads the domestic market for oriented silicon steel. Oriented silicon steel is used in transformers and other power equipment.

"We have made a major breakthrough in developing oriented silicon steel which will become our new profit growth driver," he said.

Fu also said Baosteel is set to return to the black in the current quarter, after posting a loss in the previous quarter.

"Baosteel won't be unprofitable in the first quarter, although the whole steel industry is difficult," he said.

A rise in raw material prices and a sharp decline in demand and prices pulled down Baosteel's annual earnings by 49.2 percent and saw the firm post a fourth-quarter loss of 6 billion yuan.

A global recession has hurt demand for steel, of which China is the top producer, leading to overcapacity and a slump in prices which would remain at low levels, Baosteel Chairman Xu Lejiang said.

Baosteel produced 23.12 million tons of crude steel in 2008, Fu said. The mill said earlier it plans to produce 24.9 million tons this year.


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