Posted on 15 Jul 2009
Baoshan, Chinese Steelmakers Rise on Outlook for Prices, Profit
Baoshan Iron & Steel Co. led steelmakers higher on Chinese stock exchanges on optimism higher product prices will bolster earnings and as the uncertainty of iron ore talks were removed.
Baoshan Steel, China’s biggest steelmaker, rose 3.4 percent to 8.52 yuan at 1:06 p.m. in Shanghai, set for the highest since July 28. Angang Steel Co., the No. 2, added 4.1 percent to 14.85 yuan in Shenzhen while Wuhan Iron & Steel Co., the third- largest, climbed 4.8 percent to 9.88 yuan in Shanghai. The benchmark Shanghai Composite Index added 1.1 percent.
The average spot price for China domestic hot-rolled steel sheet, the steelmaking industry benchmark, rose to 3,922 yuan a metric ton yesterday, the highest since Feb. 16, according to data from Beijing Antaike Information Development Co. The price has increased 3.3 percent this month.
“There has been a frenzy about steel stocks as many believe their profits would peak next year on strong demand,” said Xu Minle, an analyst at BOC International Ltd. in Shanghai, who has an “overweight” rating on the steelmaking industry. “With the iron ore talks looking set to be over, it will be easier for investors to gauge the profits of steelmakers.”
Major Chinese steelmakers have accepted a temporary 33 percent price cut from Rio Tinto Group, and may allow annual contract talks to lapse, Umetal Research Institute said.
