Baoshan Steel says first-half profit plunges 93%

Baoshan Iron & Steel Co., China's biggest steelmaker, said first-half profit plunged 93 percent because an economic slowdown curbed demand from automakers and shipbuilders.

Net income fell to 669 million yuan ($98 million), or 0.04 yuan a share, for the six months ended June 30, from 9.26 billion yuan, or 0.53 yuan, a year ago, the Shanghai-based company said today in a statement to the Shanghai stock exchange. The mean estimate of five analysts compiled by Bloomberg was for earnings per share of 0.029 yuan.

China's steel industry posted seven-straight months of losses starting October as prices dropped to 1994 levels. Prices have revived as expanding credit and the government's 4 trillion yuan stimulus package fueled a building boom and car purchases.

"The stimulus policy-driven demand for steel will rise steadily in the second half," Liu Junqing, an analyst at Taiyuan-based Shanxi Securities Co., said before the announcement. "Steel prices will creep up."

Baoshan Steel has risen 49 percent this year, compared with a 57 percent gain in the benchmark Shanghai Composite Index. The stock fell 3.8 percent to close at 6.90 yuan before the announcement.

'Uncertainties'

Sales fell to 65.5 billion yuan in the first six months from 103.4 billion yuan a year ago.

China's monthly steel output reached records for three straight months this year, and prices have jumped 21 percent since the government announced the stimulus package in November. Baoshan Steel has increased prices for three months since July.

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