Oct. 20 (Bloomberg) -- Maanshan Iron and Steel Co., the second-biggest Hong Kong-traded steelmaker, said third-quarter profit surged almost fivefold as production rose and taxes fell.
Net income climbed to 14.6 million yuan ($2.3 million), or 0.19 yuan a share, in the quarter ended Sept. 30, from 3.04 million yuan, or 0.04 yuan a share, a year ago, according to a statement on the Shanghai Stock Exchange today. Sales increased 36 percent to 23.2 billion yuan.
China’s steel prices have fallen since reaching 4,839 yuan a metric ton on Aug. 16, according to Beijing Antaike Information Development Co., amid concerns of a slowing global economy and moderating construction demand. The prices of hot- rolled coil, a benchmark product, fell 2.8 percent, the biggest drop since Dec. 2009, today to 4,236 yuan.
Maanshan advanced 0.5 percent to close at HK$1.92 today in Hong Kong trading, compared with a 1.8 percent drop in the benchmark Hang Seng Index. The stock has shed 60 percent in the past year.
The company said it raised production of crude steel by 8.4 percent to 4.41 million tons and output of steel products by 13 percent to 4.3 million tons in the third quarter from a year ago.
While steel production capacity remained at a “high level,” demand was “weak” and overall steel prices were “low and fluctuating” in the third quarter, the company said. It will continue to cut costs and improve efficiency, according to the statement.
Contract iron ore prices the Chinese steelmakers paid Vale SA, Rio Tinto Group and BHP Billiton Ltd. stayed near record levels in the quarter.
Lower steel prices may force mills to cut production in the fourth quarter, trimming consumption for the raw material iron ore, analysts including Custeel.com’s Hu Yanping has said.
Maanshan’s short term borrowings at the end of September were 6.8 billion yuan, almost 600 percent higher than at the end of December, due to increases in loans for working capital resulting from higher steel product sales and commercial trading, according a statement made to the Hong Kong stock exchange today.
Taxes and surcharges in the third quarter dropped to 52 million yuan from 73 million yuan a year ago, the company said.
--Helen Yuan. Editor: Nerys Avery
To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at firstname.lastname@example.org
To contact the editor responsible for this story: Rebecca Keenan at email@example.com