The global steel industry is on the mend, at least for now.
China’s Baoshan Iron & Steel Co (寶鋼) opened the earnings season for the quarter ending September by reporting a jump in profit that is likely to presage similar figures from producers in Asia, Europe and the US.
The listed unit of Baosteel Group Corp (寶鋼集團) — the steelmaker that is merging with a local rival to become China’s biggest — posted net income of 2.13 billion yuan (US$315 million) in the period, compared with a loss a year ago, as sales rose 34 percent, according to a statement late on Monday.
Full-year earnings could surge as much as 800 percent, the Shanghai-based mill said.
Steel prices have rallied this year after the Chinese government aided demand with a credit-and-infrastructure splurge, resuscitating mills’ profit margins that had been squeezed last year amid a global glut of metal.
Hesteel Co (河鋼), the listed unit of the group that is still China’s top producer, is to announce earnings today after saying it expects higher net income.
South Korea’s POSCO and Japan’s JFE Holdings Inc are also due to turn in their report cards this week.
“The steel market on the whole picked up in the third quarter,” Baoshan Steel said in the statement that was released after the close of trade.
The quarterly net income figure was the company’s biggest since 2012.
However, it added: “The industry situation of supply exceeding demand still persists.”
Hot-rolled coil, used in buildings, cars and machinery, has surged more than 40 percent this year on the Shanghai Futures Exchange, after plunging last year.
Prices yesterday returned to their highest level since April, when steel prices spiked as the government’s stimulus measures fed through to better demand.
The Chinese government has been promoting mergers in the world’s largest steel industry to reduce overcapacity and create fewer, more efficient mills.
State-owned Baosteel will become China’s largest mill — and the global No. 2 by output — when it takes over Wuhan Iron & Steel Group Corp (武漢鋼鐵) in a merger that was granted approval this month.
Mills in India — including JSW Steel Ltd — are also expected to report better quarterly figures after products prices rose, the government moved to stem a tide of cheap Chinese imports and some producers boosted output.
In Japan, steelmakers may find their performance undermined by the strength of the yen, which has surged this year.
