SHANGHAI: China’s Baoshan Iron and Steel Co (Baosteel), the world’s fourth most valuable steel maker, reported a near-tripling of second-quarter net profit yesterday on demand from the country's booming car and construction industries.
Underscoring the strong growth in the automobile industry, Baosteel also said it would build a three-billion yuan (US$362.5mil) plant with Japan’s Nippon Steel Corp to produce special thin steel plates for luxury cars.
China’s car production had doubled in the first half, putting it on track to hit the two million units mark this year.
Baosteel posted a net profits of 2.09 billion yuan for the second quarter, versus 798.23 million yuan a year ago. Revenue rose 46.1% to 22.1 billion yuan from January to June.
The results of Baosteel, which vies with Nippon Steel and South Korea’s POSCO to supply an economy that grew 8.2% in the first half of this year, exceeded analysts’ expectations. A Reuters poll of four analysts had yielded an average net profit forecast of 1.72 billion yuan for the second quarter.
Meanwhile, the production facility pact signed between Baosteel and Nippon Steel yesterday offers the Japanese company a much-desired beachhead from which to supply Japanese auto makers operating in China, such as Toyota Motor Corp and Nissan Motor Co.
The partners would invest 6.5 billion yuan in the plant over an unspecified timeframe, Baosteel said in a statement published in the Shanghai Securities News. – Reuters
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