Baoshan Iron & Steel Co. yesterday said its third-quarter net profit nearly halved from the second quarter after prices fell, and China's top listed mill expected losses in its main carbon steel sector in the current quarter due to slumping prices.

The mill earned 2.85 billion yuan (US$417 million) in the past quarter, up 19.2 percent in annualized terms. But this represented a 47.1-percent decline quarter-on-quarter.

"A nearly 50-percent drop reflects the situation of the steel industry in the third quarter," Essence Securities analyst Zhao Zhicheng said. "Baosteel's results were not a surprise."

Baosteel said that in the third quarter "steel prices have fallen in the domestic market where supply and demand have seen changes." The company blamed the global economic slowdown, weaker exports and demand from downstream industries as well as the release of new capacities.

Baosteel said its main carbon steel business saw earnings drop sharply quarter-on-quarter without giving exact figures, and said the sector may suffer a loss in the current quarter.

Its stainless steel business lost in the past quarter because of lower product and nickel prices, the firm said, adding the situation looked unlikely to change in the final quarter.

Analysts said China's steel industry is now squeezed by both declining prices of products and increasing costs of production.

(Shanghai DaIly October 30, 2008)