Posted on 01 Nov 2024
Announcing its consolidated business results for the third quarter on October 29, Baoshan Iron & Steel Co., Ltd. (Baosteel), the listed arm of the world's largest steelmaker China Baowu Steel Group (Baowu), reported a 6.53% on-year decline in revenues to Yuan 79.61 billion ($11.16 billion) while its net profits plummeted by 64.77% from July-September last year to Yuan 1.34 billion. Both results marked its lowest quarterly levels so far this year, Mysteel Global observed.
Sharper falls in steel product prices than those in prices of raw materials led to a continuous compression of steel mill profit margins during Q3, Baosteel explained.
Indeed, at one point during last quarter Mysteel's assessed prices of major carbon steel products including rebar and hot-rolled coils had touched multi year lows, as Mysteel Global reported.
The difficulties Baosteel suffered in Q3 were also experienced by many other Chinese steel mills, with their revenues and net profits both dropping from the same quarter last year, sources noted.
For example, when reporting its Q3 performance on October 26, Jiangsu Shagang Co. (Shagang), the Shenzhen-listed arm of China's largest privately-owned steelmaker, Shagang Group, reported an on-year decrease of 17.38% in it Q3 revenues to Yuan 3.15 billion and a plunge of 98% in net profits to Yuan 1.34 million.
During the three months to end-September, China's steel market was lackluster overall until a series of economic pump-priming policies announced by the central government in the last week of September boosted market confidence, Baosteel added.
In the July-September period, Baosteel's production of hot metal slipped by 1.54% on year to 12.56 million tonnes, and its crude steel output also lost 4.1% on year to 13.3 million tonnes.
As a result, during this year's first nine months, the steel giant produced 36.68 million tonnes of hot metal and 39.61 million tonnes of crude steel in total, down by 0.95% and 0.51% on year respectively.
Meanwhile, Baosteel's total revenues eased by 4.77% on year to Yuan 242.86 billion in Q1-Q3, and its net profits fell by 29.56% on year to sit at Yuan 5.88 billion, according to its report.
Baoshan Steel manages four production bases in China, comprising its Baoshan works in East China's Shanghai, Qingshan in Central China's Wuhan, Dongshan in Zhanjiang of South China's Guangdong, and Meishan in East China's Jiangsu. Its key products are auto sheet, electrical steel, oil and gas pipes, and high-end flat steel such as heavy plate and tinplate. Its consolidated results include the performances of its 12 subsidiaries, Mysteel Global notes.
Baosteel's Q3 production, sales and prices of steel products
Steel products | Output | YoY (%) | Sales | YoY (%) | Average sales price | YoY (%) |
Flat steel | 11,670 | -2.34 | 11,650 | -2.27 | 4,277 | -7.18 |
Steel pipes | 470 | -2.08 | 430 | -10.42 | 6,995 | -1.85 |
Others | 940 | -2.08 | 900 | -10.89 | 3,579 | -7.23 |
Total | 13,080 | -2.32 | 12,990 | -3.13 | 4,319 | -6.96 |
Source: Baosteel
Source:Mysteel Global
