(Bloomberg) -- The listed unit of China Baowu Steel Group, the world’s No. 1 producer, is still making money even as much of the beleaguered sector swings to a loss.
Baoshan Iron & Steel Co. isn’t immune from the troubles ravaging the world’s biggest steel industry, with third-quarter net income plunging 65% to 1.34 billion yuan ($188 million), according to a statement late Tuesday. But the result stands in contrast to the deep losses afflicting the bloated sector as China’s prolonged real estate crunch pummels demand.
Baoshan said its results “rank first in the industry.” Smaller rivals including Hesteel Co. and Angang Steel Co. report their earnings later Wednesday.
China’s steel consumption is heading for a fourth straight year of declines, fueling calls for another round of industry consolidation to stem oversupply. In August, Baowu’s chairman warned that the nation’s steelmakers were facing possibly their worst-ever crisis, although the listed company struck a more upbeat tone in its earnings statement.
“The market is expected to pick up and demand will gradually stabilize” after the government’s stimulus policies launched since late-September, Baoshan said.
Baowu produces more than a tenth of China’s steel and its output — 131 million tons last year — towers over any other steelmaker worldwide. It has historically performed better than its Chinese peers by focusing on relatively high-value products including automotive steels.
Like other Chinese steelmakers, Baowu has been relying more on exports to soften the blow of a weaker domestic market.
Export revenue at the listed company reached a record share of its total in the first nine months of the year, Baoshan said. Overseas sales of 4.66 million tons accounted for nearly 6% of China’s total.
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