4 mills results reflect growth of Chinese steel market in Q4 2009

Securities Times reported that five listed Chinese steel mills today announced their 2009 performance reports, indicating an upturn of profitability for steel industry in the fourth quarter of 2009.

The most typical among the five is Hunan Valin Steel Co Ltd which gave the market a surprise by amending its earlier prediction of a loss of CNY 220 million to an earning of CNY 100 million a decline of 89% from the previous year. The mill revealed that it is expected to make profit this year owing to the surging steel price in the last quarter of 2009 which was out of its expectation and the functional cost and expenditure control measures it has implemented.

According to the government of Hunan province by 2011, Valin Group steel capacity will reach about 20 million tonnes. Steel products will be 17.5 million tonnes and of them steel plate and pipe will account for over 70%. Sales revenue will hit CNY 118 billion and profit and tax, CNY 7 billion and CNY 10 billion by then.

Similarly, Guangzhou Iron and Steel Co Ltd having made profit in the first three quarters of last year is no doubt to bring home the bacon. The mill said the reason behind the satisfactory performance is the company's attempts to capitalize the market opportunities to expand capacity coordinate purchasing and promote marketing.

For Laiwu Iron and Steel Co Ltd its performance in 2009 was not so good enough to be celebrated which posted a decline of 50% compared with the previous year but there is no denying that it did turn red into black just in the last season, rubbing out its recorded deficit of CNY 170 million in Q1 to Q3 period.

The same is true of Benxi Steel Plate Co Ltd. It predicted to suffer a loss of CNY 1.32 billion to CNY 1.4 billion in the whole 2009, but there had been recorded a deficit of CNY 1.43 billion in the first three quarters of last year, meaning that in the last three months, it made profit.

As for Chongqin Iron and Steel Co Ltd it is hard to decide that it made profit in the last season of last year, because though it realized returns in the first three seasons it forecasted a year on year fall of over 80% from 2008.