Despite some improvement in the operating profits of listed steelmakers, their overall profits were trending downwards month by month in the first quarter of 2013. Of the 11 listed producers that have disclosed their interim results forecasts, six are worried about their balance sheets, four expect continued losses and the other two foretell a potential reduction in profit.

In the first quarter, those with year-on-year profit growth in excess of 30 percent included Baosteel, Taigang Stainless Steel, Zhejiang Materials Development, Sansteel Minguang, Zhejiang Jiuli Hi-tech Metals, etc.

However, Baosteel and Shagang have forecast sharp reductions in their profits by 50 percent and 65-95 percent respectively in the first half of 2013. Chongqing Steel and Masteel issued similar markdowns in their results.

Experts note the overall profit margin would be thin in the first half, and greater operating pressure is expected in the second quarter. Investors are recommended to look at the stock of Baosteel, benefiting from a recovery in the auto industry; Jiuli Hi-tech Metals and Beijing Cisri-gaona Materials & Technology both specializing in high-end materials with definite growth potentials; and Fushun Special Steel serving the war industry.