OREANDA-NEWS. May 15, 2012. We seek breakthrough in "meagre profit time". Faced with complex and volatile market situation and the external competitive environment, Baosteel Co.,Ltd. improves response capabilities, upholds differentiation competition strategy and strives to ensure stable operating results, reported the press-centre of Baosteel.  

In the first quarter, iron and steel production is 5.864 million tons and 6.365 million tons respectively, 636.2 million tons of billet materials are sold, 1.5 billion yuan of combined total profit is achieved and year-based increase is 470 million yuan. It continues to maintain optimal performance in the industry.

The announcement says that the world economic growth weakens significantly in the 1st quarter and China's economy rallies steadily and the regulation takes its initial effect. Domestic crude steel production breaks the continuing slump since the fourth quarter of last year, but the downstream demand rebound is slow. Steel mills and social storage pressure is still high. The accumulated total steel product export is increased by 15.8%. Overall domestic steel price goes up moderately. At the beginning of the season steel price consolidation continues low and some varieties' prices even decline. After Spring Festival, due to macroeconomic policy and the downstream demand support, steel prices rise slightly.

In the same period, due to support from crude steel production, ore index price remains oscillating high and in  narrow range, coking coal prices remain strong, steel cost levels is stable and a little tended to inflation. Subject to weak market balance and high cost, domestic steel industry overall business situation is still grave and it continues to lose in January and February, but operating conditions has improved since March.

Faced with complex operating environment, Baosteel Co.,Ltd. improves response capabilities, focuses on strengthening the implementation of the internal work, and makes efforts to ensure the stability of first quarter operating results. Through technology and product development, it constantly optimizes the product structure, improves product quality, enhances the unique product ratio and key product profitability, and further consolidates the differentiation competiton advantage. It strengthens cost control, further promotes the cost center performance management, optimizes cost improvement and continues to push forward same process cost benchmarking and promotes cost improvements. It highlights service first advantage and, with service differentiation as the main line, innovates business models, enhances customer service capabilities and creates value for customers.

Baosteel Co.,Ltd. predicts that in the second quarter, the downstream demand is likely to diverge. Long products seasonal demand will continue to be released, the prices of long products are expected to grow modestly and promote ore price which has slight growing space. However, the recovery in the manufacturing sector has not yet solid foundation, especially plate product demand is still sluggish. Plate market is facing adjustment pressure and iron and steel enterprises operating pressure is still high. Baosteel Co.,Ltd. will finish stainless steel, special steel division assets and equity sale. Thanks to loss reduced by the sale of the underlying asset, the greater overall assessed value of  underlying asset sales compared with the book value and the contribution to the reduction of the company's financial costs, the company expects 80-100% cumulative net profit increase in the first half of 2012 compared with same period last year.