Metal Products News
- Higher prices to boost Jinan Steel profit
Date: 29-Jun-2007 Sources: (Shenzhen Daily)
JINAN Iron & Steel Co., whose parent is merging with Laiwu Iron & Steel Group Co., said Thursday first-half profit may double because of higher prices and lower costs.
Net income may surge between 50 percent and 100 percent from 366.3 million yuan (US$48 million), or 0.32 yuan a share, a year earlier, the Jinan, Shandong Province-based company said in a preliminary earnings statement to the Shanghai Stock Exchange.
The merger with Laiwu would create the world's eighth-largest steelmaker as the government urges consolidation to create more competitive groups. Steel prices in China, the world's top maker of the metal, recovered this year after mills boosted exports and the government curbed loan growth.
'Most steelmakers will report good results for the first half because of higher steel prices,'' said Ma Haitian, an analyst at Beijing Antaike Information Development Co.
Jinan Steel is shifting production to higher grades as China has overcapacity in lower grades. The company increased output of steel plates, a more valuable product used in ships, and benefited from higher steel prices, Jinan said.
Prices of hot-rolled coil, an industry benchmark, have averaged 4,248 yuan a ton in China so far this year, compared with 3,776 yuan a year ago, according to Metal Bulletin. Still, the price has fallen 6.5 percent from 4,410 yuan, this year's high May 18, as the government raised export taxes May 21 to help curb a trade surplus.
The government has also said it will from July 1 remove export-tax breaks on some steel products to discourage exports, and also rein in the trade surplus.
'Jinan Steel and Laiwu will suffer in the third quarter,'' said Antaike's Ma. 'Their exports may fall due to the recent tax changes, and steel prices will be lower.''
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