SHANGHAI, Oct 22: Wuhan Steel, China’s third-largest steel maker, said on Saturday its third-quarter net profit fell 18 per cent as it cut prices due to weak domestic demand. Wuhan Iron and Steel Co. Ltd. said net profit from July through September fell to 1.1 billion yuan ($136 million) from 1.35 billion yuan in the year-ago period.

In the face of steadily falling steel prices ... the company continually faced a challenge ... and worked hard to improve its production organisation, adjust its product structure, strengthen management of its forecasting and strictly control costs, Wuhan Steel said in its quarterly results, which were published in the official Shanghai Securities News.

Wuhan Steel, which dominates the central China steel market, is the smallest of a dominant domestic trio that also includes the state-run parents of leader Baoshan Iron and Steel Co. Ltd. in the east and Angang New Steel Co. in the north.

Domestic steel prices have fallen an average of more than 20pc since the end of March, when they reached their highest levels in more than a decade. In response, Wuhan Steel cut its product prices from July, its first cut since September 2004.

Analysts have said they are not optimistic about Wuhan Steel’s fourth-quarter earnings after it cut prices again from September.

The company said in its third-quarter earnings report that it may report a net loss for the full year or a major decline in full-year profit from 2004.

Analysts blame weakening steel prices on oversupply and Beijing’s persistent efforts to curb strong growth in the steel and property sectors since early 2004, which has hurt demand.

China produced 255.28 million tons of crude steel in the first nine months of this year, growing at a quicker-than-expected rate of 27.4pc year on year.

Capacity expansion in the world’s largest producer and consumer of steel have also raised fears of rising exports and a global glut that would batter profits for global steel makers, including Arcelor and Nippon Steel Corp.—Reuters