Taiwan's China Steel Eyes Doubling Profits in 2013

Taipei, Oct.2, 2012 (CENS)--With steel markets expected to rebound, a report by S. Korea-based Samsung Securities shows that global major steel makers will see operating profit ratio grow from 3.4% this year to 4.8% in 2013, up over 40%. An institutional investor estimates China Steel Corp. (CSC), the largest steel maker in Taiwan by output, will double profits in 2013, compared to this year's.

A representative of CSC says, despite gloomy performance this year, an increasing operating profit ratio in 2013 is likely to occur due to cost decline of raw materials in international steel markets and a steady improvement of demand.

The report shows two steel makers in the U.S. witnessing the biggest improvement in operating profit ratio, mainly due to economic recovery, with United States Steel Corporation growing from 2.7% to 1.2%, Nucor Corporation rising from 5.6% to 8.5%.

Due to overcapacity, operating profit ratio of China's steel makers is likely to be limited to 3.8%, among which, Baosteel Co. Ltd. increasing from 5.2% to 6.2%, Angang Steel Company Ltd. growing from 1.8% to 3.5%, Wuhan Iron and steel Corp. improving from 1.6% to 2.8%.

An institutional investor says CSC's profits in the first eight months reached only NT$3.3 billion (US$110 million), with 2.3% in operating profit ratio, but expects robust profits next year.

CSC witnessed operating profit ratio of 14.18% in 2010, highest in Asia, and saw the ratio reach 4.86% in 2011, only next to Pohang Iron and Steel Co. (S. Korea), while the biggest three Japanese steel makers suffered losses. In the second quarter of this year, CSC ranked third in the said ratio in Asia.

An institutional investor says CSC's profit forecast this year has been reduced to NT$5.5 billion (US$183.33 million), but, as long as economy recovers, will likely double profits to NT$10 billion (US$333.33 million) next year.