Asian steel majors post profits in Q1CY23 but outlook still uncertain

The three East Asian steel majors, Baowu Steel Group of China, POSCO Holdings of South Korea, and China Steel (CSC) of Taiwan returned to profitability during the January-March 2023 (Q1CY23) period. These companies faced losses in the preceding quarter (Q4CY22) due to sluggish sales prices. However, an improvement in sales prices in Q1 resulted in profitability.

Baowu's total consolidated profit for January-March is likely to be less than RMB 1 billion, although the company seems to have become profitable. However, profits decreased in order to make up for losses of other group companies.

POSCO announced a consolidated operating profit of 700 billion won (about 70 billion yen) for the period of January-March. Although profit decreased by about 70% in the same period of the previous year, the company posted profit. Earlier, it had posted an operating loss in October-December, 2022.

China Steel Corporation (CSC) returned to profitability in February. However, the company posted an operating loss of about 960 million Taiwan dollars (about 4.2 billion yen) in Q1. It is expected that operating surplus can be achieved in the single month of March. However, the immediate focus will be on whether the company can achieve a surplus in the cumulative total for January-March.

The hot-rolled coil (HRC) market was sluggish last year for East Asia and South East Asia region, falling below $600 at one point. It has returned to $700 this year, leading to certain amount of profit in the Q1, but after exceeding $700, HRC prices recently fell again. This led to China's Baoshan Steel and CSC to keep their domestic sales prices unchanged for May, 2023.

Outlook:

One of the reasons for resurgence in market conditions is that demand for steel products in China lacks more excitement than expected. At present, not only is it difficult to expect an improvement in business performance from the April-June period (Q2). However, demand and performance trends from the second half of this year onward are still uncertain.

Note: This article has been written in accordance with an article exchange agreement between Japan Metal Daily and SteelMint.