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Metallurgical company of China increasing profits

5 September 2016

Bloomberg released data on the income of the leading manufacturers of metallurgical industry of China. Considered companies whose shares are on the stock exchange. Four of the five largest significantly increased its profit. Considered the results of the first half of 2016, relative to the same period of last year. The best indicators are owned by Shougang. For the six-month period, its net income amounted to 17 million yuan. Translated into dollars, the rate reached 2.5 million USD. Whereas in the same period last year there was a loss. Its size reached 223 million yuan.

The profit showed a leading national steel producer Hebei Iron & Steel. In the first half of the year its volume reached 409 million yuan. In dollar terms, revenue amounted to 61.3 million USD. Compared to the first half of 2015, the result improved by 14.5%. The income of Baoshan Iron & Steel increased by 9% to 3.47 billion yuan. In dollar terms reached USD 520 million. While in the same period last year, the company suffered losses. The net loss amounted to 2.16 billion yuan. In dollar terms, the result reached 324 million USD.

Against the background of these companies Wuhan Steel didn’t go too well. The company’s net income for the first half of 2016 has reached 273 million yuan. In dollars, the figure is 41 million USD. Compared to the same period a deterioration of 48%. Financial performance of four companies in China has improved amid rising cost of production in the second quarter. In April, the profitability of domestic producers averaged a record high since 2009. Thus, profitability from five months ago was in the negative zone. Building a visible demand was observed against the background of a small volume of inventory in the first half.

Despite the good results, the companies are cautious in forecasts for the second half. Representatives of Baosteel believe that the apparent demand for steel in China will fall to 680 million tons. In the past year, apparent consumption for the same period amounted to 698 million tons. Restore real consumption has not occurred. Meanwhile, the approaching cold. Soon, China will experience a seasonal decline in the construction sector. According to Baosteel, the company was able to return to profitability by reducing costs. While gross income for the first half decreased by 3.5% to 78 billion yuan or 11.7 billion USD.

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