Steel industry sees a brighter third quarter

The steel industry's better performance in the third quarter was associated with stronger construction, experts said. [Photo / Provided to China Daily]

Most domestic steelmakers are seeing an improvement in their third-quarter performance.

Fifteen of the 20 listed steel companies that issued third quarter reports made profits, as opposed to last year, when up to 90 percent of the steel mills posted a loss.

Baoshan Iron and Steel Co Ltd, or Baosteel, the nation's largest listed steelmaker, said its net profit for the first three quarters tumbled by 56.99 percent year-on-year to 4.64 billion yuan ($761.6 million), but excluding the proceeds from selling stainless steel and special steel assets during the same period last year, the Shanghai-listed steelmaker said its profit was actually 2.28 billion yuan more than a year earlier.

"There was no obvious change in the Q3 steel demand/supply relationship, while raw material prices and selling prices rebounded moderately," Baosteel said in its Tuesday evening announcement.

Large and medium-sized domestic steel companies started to reverse the continuous loss-making situation, but the whole industry was running with petty profits, said analysts.

The Shanghai-based steel bellwether expects uncertainties to linger in the fourth quarter, and the company plans to streamline production, boost cost-efficiency and strengthen marketing to ensure a stable performance, according to an annoucement made by Baosteel on Tuesday evening.

According to a report from China Merchants Securities Co Ltd, Baosteel is undergoing a major transformation, going from being a pure steel producer to becoming an all-round steel service provider.

Like Baosteel, Wuhan Iron and Steel Co Ltd also posted a profit. It made 651 million yuan in the January-September period, up 98.44 percent over what it made in all of 2012.

Another steelmaker, Jiangsu Shagang Co Ltd, turned a profit of 14.9 million yuan, rocketing 251.6 percent year-on-year.

Even ST-capped Angang Steel Co Ltd made a 765 million yuan profit in the first three quarters, hiking 124 percent year-on-year.

Analysts anticipated the third-quarter profits. In July, the leading domestic steel mills generated 2.3 billion yuan in combined profit, their earnings jumping to 3.1 billion in August.

The improvement was associated with boosts from infrastructure construction, and the automotive and real estate markets, said Yang Hua, analyst with mysteel.com, a steel market information provider.