BEIJING / HONG KONG: Chinese publicly traded steel producer Baoshan Iron & Steel Co Ltd said on Friday that its third-quarter net profit rose 68.6% year-on-year, defying intensifying pressure from production brakes and rising commodity prices.

The steel giant, known as Baosteel, pocketed 6.5 billion yuan ($ 1.02 billion) in the July-September quarter, it said in a document filed with the Shanghai Stock Exchange. This was down from the 9.7 billion yuan earned in the second quarter, but still well above the profit made by the company in the same period of 2020.

“In the third quarter (…) downstream demand such as vehicles, home appliances and engineering machinery was relatively weak,” Baosteel said, adding that demand growth overseas had slowed.

At the same time, controls on China’s steel production and energy consumption have also weighed on the company’s profitability as well as rising coal prices, according to the company.

Futures prices on coking coal, a key iron and steel ingredient, on the Dalian Commodity Exchange jumped more than 80% in the third quarter due to a squeeze in coal supplies, crippling the ‘impact of falling iron ore prices, which were down 32%.

Baosteel said it managed to overcome the difficulty by adjusting its production strategy and reducing costs.

In the first three quarters, the steelmaker’s net profit amounted to 21.59 billion yuan, up 174.5% from the January-September period in 2020, he said.

The company produced 33.13 million tons of iron and 37.05 million tons of steel this year at the end of September, according to the filing.

(US $ 1 = 6.3912 Chinese renminbi yuan)

(Reporting by Min Zhang and Meg Shen, editing by David Goodman, Robert Birsel)