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Baosteel says 2009 net profit falls 11%

(China Daily/Agencies)
Updated: 2010-01-18 08:04

Baoshan Iron & Steel Co, China's largest steelmaker, said its 2009 net profit fell about 11 percent from a year earlier as turnover declined by more than a quarter.

Baosteel, which competes with South Korea's POSCO and Japan's Nippon Steel Corp to supply the Chinese market, posted a net profit of 5.75 billion yuan ($842.3 million), down from 6.46 billion yuan a year earlier, it said in a preliminary earnings statement to the Shanghai stock exchange.

The earnings lagged a consensus forecast of 5.82 billion yuan from analysts surveyed by Thomson Reuters I/B/E/S.

Total sales fell 26 percent to 148.5 billion yuan in 2009, the company said, without giving any reasons.

Baosteel surprised the market last week by keeping prices unchanged for its key products for February sales, triggering concerns over whether the move signals souring demand, piling inventories or even a slowdown in China.

However, UBS believed the flat pricing had little to do with demand.

It could be a result of the government guidance to help relieve inflation pressure or a tactic before iron ore negotiations, it said in a recent research note.

The steelmaker had said it planned to produce 23.7 million metric tons of crude steel in 2009, nearly 5 percent lower than that targeted earlier this year.

Oversupply has weighed on the physical steel market since early August in China, with record crude steel output in August and September boosting inventories.