Posted on 05 Feb 2015
Baoshan Iron & Steel Co., China’s biggest publicly traded steelmaker, surged the 10 percent daily limit in Shanghai after announcing it would set up a 2 billion yuan ($320 million) e-commerce unit to trade steel.
Baoshan will hold 51 percent of the unit by folding in all of its stake in an existing e-commerce website, bsteel.com.cn, Shanghai-based Baoshan said yesterday in an exchange filing. Parent Baosteel Group Corp. will invest 980 million yuan in the unit for the remaining stake, Baoshan said.
The stock rose as much as 0.58 yuan, set for the biggest gain since Dec. 19, to 6.41 yuan today in Shanghai. It traded at that level at 12:30 p.m. local time.
“Baoshan’s expansion into e-commerce sparked speculation of a higher valuation over the stock,” said Wu Kan, a money manager at Shanghai-based Dragon Life Insurance Co.
Baoshan is joining other Chinese steel mills in diversifying as the industry struggles with record low prices because slowing economic growth is sapping demand.
The profit margin at domestic steelmakers was 0.85 percent last year, the lowest among all industries, the China Iron & Steel Association said in a Jan. 29 statement.
Other steel stocks in China also gained today. Hunan Valin Iron & Steel Co. surged by the daily limit to 3.65 yuan, Hebei Iron & Steel Co. was up 4.5 percent to 3.48 yuan while Angang Steel Co. increased 4.1 percent to 5.39 yuan.
