Baoshan Iron & Steel Co, one of China's two top steelmakers, rebounded to a stronger-than-expected net profit in the fourth quarter, boosted by demand from China's booming auto and appliance sectors.
Analysts expect profits to climb in the current quarter and in the months ahead, as Baosteel's strength in cold-rolled steel sheet, used in cars and consumer goods and commanding steadily rising prices, helps it to withstand surging prices for iron ore and coking coal.
Baosteel, which competes with South Korea's POSCO and Japan's Nippon Steel Corp to supply high-end customers in the Chinese steel market, the world's largest, forecast its revenue would rise 14.5 percent this year to 170 billion yuan ($24.91 billion).
Iron ore mining giants BHP Billiton and Vale have convinced the lead Japanese and South Korean steelmakers to accept a hefty iron ore price hike and a switch to short-term quarterly pricing after spot iron ore prices doubled since September.
China's industry has loudly resisted changes to the pricing system and higher ore prices, although Baosteel Chairman Xu Lejiang last week gave the first public suggestion a big Chinese mill may be willing to abandon the old system.
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