Baosteel bought 20 million shares, increasing its holdings to 74.08 percent from 73.97 percent, Baoshan Iron said yesterday in a stock exchange filing.

Analysts see the plan as an attempt to bolster the share price as steel makers are hit by higher raw material prices. Shares in Baoshan Iron, China’s biggest listed steel mill, fell 0.6 percent to 5.09 yuan (80 US cents) in Shanghai yesterday, extending this year’s decline to 20.3 percent.

Changjiang Securities analyst Liu Yuanrui said: “The main reason for the controlling shareholder to increase its holding at this time is the low price.”

Baoshan Iron has reported a 37 percent drop in first-half net earnings on slowing demand and rising costs.

CITIC Securities analyst Zhou Xizeng said the share purchase reflected Baosteel’s confidence in rebounding demand for flat steel products, used by the auto and home appliance industries, which he said is likely to bounce back in the fourth quarter and throughout 2012. – Shanghai Daily

Source:cnbusinessnews