Shagang’s net profit surges fourfold in H1

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The result is more than double the figure it predicted for the period back in May.

The company generated revenue of 5.3 billion yuan ($859.7 million) in January-June, up 2.8% on an annual basis, according to the report.

China’s steel mills have benefitted from cheaper input costs this year, as the drop in iron ore prices outpaces those of steel. Combined net profits of member mills of the country’s iron and steel assn (Cisa) for the first half more than doubled on a yearly basis.

Metal Bulletin’s 62% Fe iron ore index averaged at $111.79 per tonne cfr China during the first half of this year, down 18.8% from an average of $137.59 in H1 2013. Prices have remained below $100 since May 19, dropping below the $90-per-tonne threshold on Tuesday.

Rebar prices in Eastern China on the other hand averaged at 3,212 during the period, down just 8% from year-earlier levels.

Shagang was also optimistic about its performance in the third quarter.

The steelmaker estimates its net profit for the first nine months will likely be treble year-earlier levels at 50-55 million yuan ($8.1-8.9 million), due to market expansion and increased sales volumes.

Shagang produced 1.5 million tonnes steel and 1.48 million tonnes of pig iron in the first half, up 0.62% and 3.46% year-on-year, respectively.

The mill exported 56,000 tonnes of steel products during the period, generating $34.2 million of revenue, mainly to South Korea, Thailand, Vietnam and Britain. The mill did not provide figures for the previous year.