China: HBIS' net profits down 36% in H1 amid lower steel production

New profits at HBIS Company Limited, the Shenzhen-listed arm of Hebei Iron & Steel Group who is a top-tier steel producer in China, plunged by 36% on year during the first half of 2022, and its H1 steel production also saw an on-year decline, according to the company's latest semi-annual report released on August 26.

HBIS's net profits declined to Yuan 973.8 million ($142 million) over January-June, and its production of crude steel slipped by 1.7% on year to 13.8 million tonnes, while that of pig iron edged up by 0.8% on year to 14.4 million tonnes. The firm's finished steel output in H1 also slipped by 0.8% on year to 13.1 million tonnes, according to the official data.

The decline in HBIS' net profits was within the market expectation, as most Chinese steelmakers saw their profits decline in the first half with steel prices continuing to decline since the second quarter against relatively high steelmaking raw material prices, a Shanghai-based analyst shared.

Over January-June, China's national average price of 1mm cold-rolled coil under Mysteel's assessment dropped by Yuan 413.2/t or 7% on year to Yuan 5,526.8/t including the 13% VAT on average, while Mysteel SEADEX 62% Australian Fines hovered at a relatively high level of $139.7/dmt CFR Qingdao on average, despite an on-year fall of $43.1/dmt.

In H1, steel demand from end-users was lower than expected, as many indicators for Chinese steel industry had posted on-year falls, the survey showed.

For example, China's total excavator sales plunged by 36.1% on year to 143,094 units in the first half, according to the data from China Construction Machinery Association. And sales of all types of vehicles slipped by 6.6% on year to 12.1 million units in H1, while total auto production also edged down by 3.7% on year to 12.1 million units, as per data from China Association of Automobile Manufacturers.

Written by Villanelle Xia, xiayi@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.