UPDATE 1-China Baosteel posts biggest profit increase in nine quarters on firm demand, cost cuts

* Baosteel’s Q1 net profit up 248% from year earlier

* 2020 net income at 12.7 bln yuan

* Aims to produce 51.13 mln tonnes steel this year (Recasts)

BEIJING/HONG KONG, April 26 (Reuters) - China’s biggest listed steelmaker Baoshan Iron & Steel’s net profit surged 247.8% in the first quarter to its highest since the fourth quarter of 2018, the company said on Monday, thanks to robust steel consumption and cost reduction efforts.

Known as Baosteel, the steel group earned 5.4 billion yuan ($832.50 million) in the first quarter, up 11.2% from the fourth quarter in 2020 and compared with 1.5 billion yuan net profit in January-March last year.

“Supported by both domestic economic recovery and demand expectation, the steel sector has improved and downstream orders are full,” Baosteel said in a filing to the Shanghai Stock Exchange.

The company said sales volume for silicon steel, one of its flagship high-end steel products, also hit historical highs in the first quarter.

Despite increasing raw material prices like iron ore, Baosteel had managed to cut costs by 1.3 billion yuan by improving efficiency, which also helped to boost company’s performance, it said in the filing.

“We expect our net profit in the first half will also rise significantly from a year earlier,” the company said.

In a separate statement on the Shanghai bourse, Baosteel said its net income stood at 12.7 billion yuan in 2020, up 0.9% and returned to positive annual growth.

The steel producer had been hit by sluggish downstream consumption since 2019 and last year’s coronavirus pandemic. Its net profits picked up after the third quarter in 2020 amid rising steel prices and a revival in demand.

The company aims to produce 51.13 million tonnes of steel and to realise total income of 289.6 billion yuan in 2021, compared with steel output of 45.62 million tonnes and income of 283.7 billion yuan last year, the filing said.

Baosteel’s stock price closed at 8.66 yuan per share on Monday. It has gained 45.55% so far this year.

$1 = 6.4865 Chinese yuan renminbi Reporting by Min Zhang and Meg Shen, editing by Louise Heavens and Jane Merriman