Ningbo Baoxin Stainless Steel to Gain Net Profit in 2006

Ningbo Baoxin Stainless Steel, the joint venture by Nissin Steel of Japan and Bao Steel of China to produce cold-rolled stainless steel sheet, expects the firm could post net profits after depreciation through 2006 when the JV improved the profitability remarkably thanks to the stainless steel market recovery in China. The JV estimates the net profit could recover to the even point in 2006 from more than 10 billion yen of net loss in 2005.Ningbo Baoxin Stainless Steel expanded the producing capacity to 600,000 tonnes per year toward the end of 2005 along its 4th-period plant expansion project. However, the firm could not increase the production despite of starting operation of the expanded equipment when Chinese stainless steel market turned weak in April 2005 and became much worse toward the end of the year. The annual production of the JV was only 280,000 tonnes in 2005.The JV’s profitability has remarkably improved when Chinese stainless steel market rapidly recovered since the end of 2005. The JV’s production increased to 180,000 tonnes in January-June 2006 and made the net profit after depreciation breakeven for the half year. Nisshin Steel re-started the supply of hot-rolled stainless steel coil to the JV in February 2006, though Nisshin Steel had stopped the supply from July 2005 to January 2006. The supply volume recovered to 5,000-6,000 tonnes per month. The JV plans to keep the production volume in July-December 2006 as same as the first half year and estimates 360,000 tonnes of annual production through 2006.