Baosteel sees net earnings to surge last year

The net profit surge is bolstered by a rally in steel prices amid China's supply cuts.

Shanghai-listed Baoshan Iron & Steel Co expects net earnings to surge between 113 and 121 percent in 2017 from a year ago amid a rally in steel prices as China cuts supply.

Net profit attributed to shareholders last year is set to rise between 10.1 billion and 10.8 billion yuan (US$1.6 billlon-US$1.7 billion) from 2016, as the company's profit margins widened amid steel price increases and its efforts to cut costs, it said today via a public filing. Its net profit in 2016 totaled 8.97 billion yuan.

In 2017 steel prices nationwide rose as China cut 50 million tons of steel capacity. The rebar price in Shanghai gained 38.1 percent to 4,350 yuan per ton and in Beijing it rose 37.7 percent to 4,090 yuan per ton, according to Lange Steel Information Center, a steel industry consultancy.

The price gain has helped Baosteel to “reap higher profit margins,” the company said. Its Zhanjiang plant in Guangdong Province has "scaled up production and diversified product portfolio to enlarge profits."

The steelmaker also attributed the profit growth to higher synergies with Wuhan Steel which merged with Baosteel in 2016 to form parent group Baowu Steel Group Corp.

Several domestic steel companies have also predicted profit growth. Lingyuan Iron & Steel Co estimates an annual jump of 792 percent and Hang Zhou Iron & Steel Co expects its 2017 profit to surge 147 percent from a year ago “bolstered by price rises amid supply-side reform,” they said in reports.

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