April 24, 2019 / 3:16 PM / a year ago

China's Baosteel posts first quarterly profit drop since 2015

* Q1 2019 net profit 2.73 bln yuan, down 45.7 pct on year

* It produced 11.22 mln T of iron, 11.84 mln T of steel

* Baosteel expects better fundamentals in Q2

BEIJING, April 24 (Reuters) - China’s Baoshan Iron and Steel Co Ltd (Baosteel) posted a net 45.7 percent drop in profit in the first quarter from a year ago, its first negative growth since 2015, as higher raw material prices and weak auto demand crimped profitability.

The country’s largest listed steel maker reported a net profit of 2.73 billion yuan ($406.21 million) in the first three months of 2019, a statement filed to Shanghai Stock Exchange showed on late on Wednesday. That compared to 5.02 billion yuan of net income in the same period in 2018.

Revenue in the first quarter fell 3.1 percent from a year ago to 65.38 billion yuan, the company said.

“Demand from auto market was weak in the first quarter ... Meanwhile iron ore prices hiked 15.5 percent from the prior quarter, which narrowed profit margins,” Baosteel said.

Rising iron ore prices was fuelled by concerns over tight supply following a tailings dam burst at Brazilian miner Vale SA , killing hundreds of people, and a tropical cyclone in Western Australia, causing disruption to operations at iron ore mines and damage to port facilities.

China’s automobile sales fell 11.3 percent in the first quarter from a year earlier, the China Association of Automobile Manufacturers (CAAM) said earlier this month.

In the first three months of the year, Baosteel produced 11.22 million tonnes of iron and 11.84 million tonnes of steel.

It expects fundamentals in steel markets to improve in the second quarter as Beijing and Washington get closer to a trade deal, meanwhile China’s stimulus policy will offer support on demand side. ($1 = 6.7207 Chinese yuan renminbi) (Reporting by Muyu Xu and Shivani Singh; editing by David Evans)

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