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Wuhan Iron & Steel Group (Wugang), one of China's biggest steel mills, posted a one-fifth growth in first-half profit on increased sales and cost-cutting efforts.

The company said its January-June profit rose by 20.48 percent to a record 6.05 billion yuan from a year earlier, laying a solid foundation for its target of earning 10 billion yuan for the whole of the year.

Wugang's sales revenue reached 63.18 billion yuan in the first six months, up 89.78 percent compared to the same period last year, it said.

Meanwhile, its crude steel production increased by 54.93 percent to 11.26 million tons. The group had earlier said that it expected to produce 22 million tons in 2008.

Wugang said it is also doing its utmost to cut costs mainly by using more home-produced iron ore to fend off price hikes of overseas iron ore as well as other raw materials.

Baosteel Group, China's top steel producer, which represented the domestic steel industry in talks, recently agreed on an iron ore price surge of as much as 97 percent till March 2009 with BHP Billiton and Rio Tinto, the world's two major ore providers.

In February, Baosteel also agreed with another iron ore supplier CVRD to raise prices of the raw material by 65 percent.

Analysts said the price hikes were putting great pressure on the country's steel industry, as China is the world's largest iron ore importer.

China's iron ore imports grew by 20 percent to 192.35 million tons in the first five months of this year, according to industry data.

Source: China Daily