Major Chinese steelmaker Baoshan Iron & Steel Co., Ltd (Baosteel), a listed subsidiary of the state-owned China Baowu Group, has issued its financial report for the first six months this year, stating that its operating revenue amounted to RMB 169.855 billion ($23.6 billion) in the given period, down 7.5 percent year on year, while its net profit came to RMB 4.552 billion ($0.6 billion), down 41.6 percent year on year.
In the given period, Baosteel produced 24.271 million mt of pig iron and 25.943 million mt of crude steel, up 5.06 percent and 2.85 percent, respectively, while it sold 25.562 million mt of finished steel, rising by 6.11 percent, all year on year.
Despite increases in production and sales, weaker steel prices in 2023 in both local and export markets compared to last year, higher competition, and still high costs of raw materials have led to lower profits. A number of Chinese steel producers have even recorded losses. For instance, according to SteelOrbis’ data, Chinese mills’ HRC prices in early April 2022 reached a peak at $900/mt FOB on average, while in the same period of 2023 they were only at $660-665/mt FOB. Baosteel saw a milder impact from falling prices on its profits compared to some other large mills in China given the large share of high value-added steel in its portfolio and its strong diversification.
Taking into account the Chinese government’s call to keep steel production at the same or slightly lower levels than in 2022, Baosteel, like other Chinese steelmakers will have to cut output in the second half of the current year. According to the company’s plan released in May, its crude steel production target for 2023 is 50.89 million mt, down from 51.2 million mt in 2022. So, in the second half of the year, the company will have to lower output by 3.8 percent or by around 1 million mt.