Wang Juan, chief financial officer (CFO) of major Chinese steelmaker Baosteel, said during a news conference held on August 28 that China’s main steel end-users will continue improving in the second half of the current year, which will drive China’s crude steel production four percent higher year on year in 2020 to 1.04 billion mt, which will be the first time ever that the country’s steel output will exceed 1 billion mt. At the same time, Mr. Wang said the high level of iron ore prices will bolster steel prices in the third quarter of the current year, while iron ore prices will undergo a downward correction in the fourth quarter, though average iron ore prices for the whole year will be higher than the level recorded in the previous year.
In general, the producer expect the third quarter to be the best period for the local steel market, especially the flat steel segment, in 2020. Baosteel forecasts that China’s vehicle production will decrease by six percent year on year to 24.2 million units in the current year - an improvement from the 11.8 percent year-on-year decline in the January-July period of the current year. At the same time, he also noted Baosteel has officially supplied products to Tesla.
Meanwhile, the Baosteel official stated that China's property and infrastructure sectors will continue to provide firm demand for steel in the second half of the current year, which will benefit long steel and flat steel products used in infrastructure projects, such as in bridges, wind mills and hydropower plants.
The net profit in the first half of the current year of Baoshan Iron and Steel Co. Ltd - listed subsidiary of Baosteel - reached RMB 4.002 billion ($0.58 billion), down 36.87 percent year on year. In the given period, its pig iron output decreased by four percent year on year to 21.993 million mt, with crude steel output down three percent year on year to 23.457 million mt. The declines were mainly due to the permanent shutdown since October 2019 of its subsidiary Wuhan Iron & Steel's No. 1 blast furnace which had a 1.8 million mt per year capacity.