China's Biggest Listed Steelmaker Expects 'Difficult' 3Q

Reuters

Baoshan Iron and Steel , China's biggest listed steelmaker, expects the third quarter of 2012 to be the "most difficult", but it is unlikely to face losses over the period, it said on Wednesday.

"According to current forecasts, the third quarter will be the worst period of the year," general manager Ma Guoqiang said during an online shareholder briefing.

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The company, also known as Baosteel, earned profits of 2.38 billion yuan ($374.63 million) in the first half of the year, down 53 percent from a year earlier, its performance hit by sluggish demand and persistent overproduction in the Chinese steel sector, the world's biggest.

The chairman of Baosteel's board of directors, He Wenbo, said at the same online conference that steel prices were unlikely to stage any recovery in the second half of 2012, adding that despite the rapid fall in iron ore prices, domestic steel firms were still facing "huge cost pressures".

Rebar prices on the Shanghai Futures Exchange are at their lowest level since the futures were launched in 2009, and sluggish Chinese demand has curbed appetite for iron ore, pushing prices down to their lowest level since late 2009. ($1 = 6.3530 Chinese yuan) (Reporting by David Stanway; Editing by Ken Wills)