SHARES of China’s Baoshan Iron and Steel, the country’s biggest listed steelmaker, surged 10 percent yesterday after the company announced plans to buy back up to 5 billion yuan (US$786 million) worth of shares to boost investor confidence.

The firm, commonly known as Baosteel, will repurchase its shares at a price of 5 yuan per share. Its shares had fallen 16 percent so far this year.

The company said yesterday that its first-half net profit surged more than 89 percent from a year earlier, helped by a sale of assets.

Net profit rose to 9.61 billion yuan for the first six months, compared with 5.08 billion yuan for the same period of 2011, the listed unit of industry giant Baosteel Group said.

The firm attributed the rise in net profit to the sale of some of its stainless steel and special steel assets, which netted 9.09 billion yuan, to two entities controlled by its State parent.

However, operating profit slumped 59.8 percent from a year earlier to 2.72 billion yuan in the first half, due to weakening demand and declining steel prices in China as the domestic economy slowed.

Revenue for the first half dropped 11.7 percent year-on-year to 98.10 billion yuan, Baosteel said.

Domestic steelmakers will still face pressure in the second half of this year despite China’s efforts to spur economic growth, as domestic steel prices will likely remain at low levels due to oversupply in the market, it said.

The broader markets staged a rebound yesterday afternoon. The Shanghai Composite Index jumped 0.85 percent to take back some of a 1.7-percent plunge in the previous session that took the index to another 3.5-year low.

(SD-Agencies)