Baoshan Iron and Steel Co, the listed unit of China’s largest steel mill, said on Thursday it would be hard to achieve a 2009 net profit at this year’s level as it confronts weak demand.

The comments came after Baosteel, the world’s fifth-largest steelmaker, late on Wednesday reported a weaker-than-exected 19.2 percent rise in third-quarter net profit and said key product areas would see losses in the fourth quarter, due to falling domestic steel prices and high raw material costs.

“It will be very difficult for Baosteel to maintain its 2009 earnings at the same level as this year’s, as a medium-term correction has begun in the steel industry,” Baosteel Board Secretary Chen Ying told an online briefing.

Several analysts lowered their forecasts for Baosteel’s 2008 and 2009 earnings after the third-quarter announcement.

Shanghai-based Orient Securities said on Thursday in a note that it expected the company’s earnings per share at 0.68 yuan in 2008 and 0.41 yuan in 2009.

The forecast for 2008 suggested Baosteel could see a loss of around 500 million yuan ($73.13 million) in the fourth quarter.

The global economic slowdown, coupled with a domestic housing slump, has hit China’s domestic demand and exports.

Top steel mills have cut output by up to 20 percent partly due to hefty inventories that are losing value and hurting their cash positions.

Baosteel now has inventories worth about 52.1 billion yuan, Chen said, including 17.7 billion yuan of raw materials and 16.3 billion yuan of finished products.

Sources close to Baosteel Group, the listed unit’s parent company, said earlier this month that the group would cut production by about 1 million tonnes in conjunction with an overhaul of a major blast furnace.

Chen did not comment directly on output cuts, however, saying only that the company would schedule its production in the remainder of the year in accordance with orders it received.

Cui Jian, vice president of Baosteel, told the briefing that Baosteel’s state-owned parent was studying a possible increase in its shareholding in the listed unit but the company itself was not considering buying back its shares.

Baosteel’s Shanghai-listed shares were up 0.22 percent at 4.61 yuan in afternoon trade, underperforming a 2.3 percent rise in the benchmark Shanghai Composite Index

Baoshan Iron and Steel Co, the listed unit of China’s largest steel maker, said on Wednesday that it expected losses on its carbon steel products in the fourth quarter of this year due to slumping prices.

The company also said its stainless steel products, which were in the red in the third quarter ended in September, would continue to post losses in the fourth quarter.

The global economic slowdown and a domestic housing slump have hit both China’s steel demand and its exports. Top steel mills have cut output by up to one-fifth and lowered their steel prices.

The China Iron and Steel Association stated recently that the country’s steel sector suffered overall losses this month and predicted that trend would continue in the last two months of this year.

Japan’s largest steelmaker Nippon Steel Corp plans to cut its steel shipments in the fiscal second half by 1 million tonnes from the earlier envisioned level, the firm said.
 
 Its total shipments in fiscal 2008 therefore will come to about 32 million tonnes.
 
 Mr Kiichiro Masuda executive VP of Nippon at a press conference said that the global economy is expected to slow further and that steel demand is seen to be negatively affected as a result.

Japan’s Nippon Steel Corp announced that its second quarter net income dropped by 12% YoY to JPY 78.92 billion yen hurt by higher materials costs.
 
 Its sales improved by 17% to JPY 1.40 trillion yen.
 
 For the first six months through September, the company’s net profit was down by 8.4% to JPY 161.68 billion. Operating profit declined by 6.1% to JPY 248.41 billion and sales were down by 12.3% YoY to JPY 2.6 trillion in the first half of the business year starting in April.