China: Baosteel's H1 net profits drop 41.6% y-o-y

Baoshan Iron & Steel Co., Ltd. (Baosteel), the listed arm of the world's largest steelmaker China Baowu Steel Group, reported an on-year drop of 41.6% in its net profits to reach Yuan 4.55 billion ($624.72 million) during the first half of 2023, according to the company's latest interim report released on August 30.

In the first six months, Baosteel produced a total of 24.27 million tonnes of hot metal and 25.94 million tonnes of crude steel, and its sales volume of billets settled at 25.56 million tonnes, the report noted.

Meanwhile, the company's operating revenue registered Yuan 169.85 billion in H1, down by 7.5% on year, but still ranking the top among Chinese steelmakers who have released their semi-annual reports by August 31, Mysteel Global learned from public information.

Baosteel's business performance in H1 was quite impressive, given that many steelmakers recorded larger drops in their profits or even fell into losses.

For example, Jiangsu Shagang Co, the Shenzhen-listed arm of China's leading privately-owned steelmaker Shagang Group, posted a 70.5% on-year tumble in its net profits in H1 to Yuan 106 million, as Mysteel Global reported.

During the same period, Angang Steel Co, the Shenzhen-listed arm of China's second-largest steelmaker Ansteel Iron & Steel Group, saw its H1 profits plunging by 178.4% on year and forced it to post a net loss of Yuan 1.35 billion, Mysteel Global noted.

Against the backdrop of a global economic slowdown and weak domestic steel demand, China's steel industry was overall under great pressure in H1, with steel prices staying on the downtrend for months before recovering slightly in June and steelmakers suffering from thinning profit margins and even expanding losses, Baosteel noted in its report.

Baosteel held steady to its product differentiation strategy and scaled up efforts towards international, innovative, and green development during the first half, the report stressed.

The company's steel exports jumped by 27% on year to 2.99 million tonnes in H1, the company's data showed.

Earlier in May this year, the steel giant signed agreements with Saudi Aramco and Public Investment Fund to jointly establish an integrated steel plate mill in Saudi Arabia. The new mill will produce 1.5 million tonnes of medium plates and 2.5 million tonnes of direct reduced iron (DRI) annually after it is put into operation by the end of 2026, as Mysteel Global reported.

China's steel industry may find some upward momentum in the second half of this year, considering the gradual recovery of domestic economy alongside the central government's support measures, Baosteel expected.

Specifically, the prices of steel products in China are expected to rebound to some extent in H2 as downstream demand may picks up while steel output is likely to fall, which will improve profit margins earned by steel producers, though the overall profitability may still hover at relatively low levels, it predicted.

Written by Carly Chen, chenziyi@mysteel.com
Edited by Alyssa Ren, rentingting@mysteel.com

Note: This article has been written in accordance with an article exchange agreement between Mysteel Global and SteelMint.