Baoshan Iron & Steel Co (Baoshan Steel), the Shanghai-listed arm of the world’s largest steel mill – China Baowu Steel Group – expects its own crude steel output to decline in the second half of 2021 from H1, and iron ore price to decline further for the remainder of this year mainly on Beijing’s curtailing national steel output.
The company shared these viewpoints during an online press conference with its shareholders on August 30 analyzing its H1 performance, adding, though, that its profits may not be impacted as much as it will fill up the gap from lower steel output with cost management and steel product structure optimization for higher margins.
In the first half of 2021, Baoshan Steel’s steel output growth was largely in line with that for the whole country, which gained 11.8% on year to 26.2 million tonnes, as reported.
Baoshan Steel has already felt the impact of the steel output curbing, Mysteel Global understood from the remarks by Wang Juan, CFO of Baoshan Steel, as the No.3 blast furnace at its Zhanjiang steelworks in South China’s Guangdong province, has yet been ignited though it has met all the requirements, according to her. All the three blast furnaces in Zhanjiang are at 5,050 cu m.
For H2, Baoshan has scheduled a series of interim and annual maintenance on the blast furnaces at its major steelworks, but the company will closely monitor the actual steel demand structure and make timely adjustments accordingly in its resources allocation and output to maximize the profitability, she added.
Zou Jixin, chairman of Baoshan Steel, commented that “with more provinces restricting their local crude steel output, the supply-demand structure for iron ore has notably reversed, and iron ore prices have been a downtrend”.
Since July, the news on more Chinese steel mills’ trimming their steel output tumbled China’s iron ore prices, resulting in the second round of price volatility and softening, as over July-August, Mysteel SEADEX 62% Australian Fines slumped to the lowest at $129.25/dmt CFR Qingdao as of August 19, or down $92.95/dmt from the highest at $222.2/dmt on July 7.
By the end of August 31, index recovered slightly to $151.55/dmt, which was down $65.5/dmt from June 30.
Written by Victoria Zou, zyongjia@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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