Baoshan Iron & Steel Co (Baoshan Steel), the Shanghai-listed arm of the world’s largest steel mill – China Baowu Steel Group – posted double-digit growths both in steel output and sales volume, and a record high in its pre-tax profit in the first half of this year, thanks to all-round recovery in global economy and steel-using sectors from COVID-19 impact, according to the company’s interim report released on August 28.
“2021 is a year of all-round recovery of global economies, with economic indicators of all major economies in the world showing an upward momentum,” Baoshan Steel commented.
In H1, Baoshan Steel produced 22.7 million tonnes of pig iron, up 3.4% on year, while its crude steel output grew more substantially by 11.8% on year to 26.2 million tonnes, which matched the pace in its steel sales, as the volume including both the semis and finished products totaled 25.4 million tonnes, up 13.5% on year, Mysteel Global calculated based on the company’s official data.
Over January-June, Baoshan Steel’s pre-tax profit approximated Yuan 20.5 billion ($3.2 billion), up 253% on year, or the highest for the corresponding periods since its listing in December 2000, among which the amount for Q2, totalled Yuan 13 billion, or a record quarterly high, according to the interim report.
As for China’s domestic market, demand from steel-using sectors was robust in the context of the country’s strong GDP growth at 12.7% on year in H1, enabling the country’s economy to have a good start, according to Baoshan Steel.
In the overseas market, economic stimulating efforts via fiscal and monetary policies after the COVID-19 pandemic such as in Europe and the U.S. have boosted steel demand from the end-users in the construction and automobile manufacturing sectors, leading to undersupply with the slower catch-up in steel production, it added.
Baoshan Steel also attributed its record-high profit to overall global commodity price surges in the first half, though it admitted rises in its steel production cost as a result, posting that its operational costs jumped 32.9% on year with commodity price rises a core contributor.
In the near term, Baoshan Steel estimates China’s domestic steel price to soften in H2 in general, though there may be room for price to recover for a short period of time in Q4 mainly on demand.
In the years to come, China’s steel industry will be scaling down steel output and promoting low-carbon emission in the context of China’s commitment to carbon emission peak and carbon neutral, it projected.
Baoshan Steel operate Baowu’s four production bases in China including the Baoshan works in East China’s Shanghai, Meishan in East China’s Jiangsu, Qingshan in Wuhan, Central China’s Hubei, and Dongshan in Zhanjiang, South China’s Guangdong, with core products primarily being flats including auto sheet, electrical steel, heavy plate, tinplate, as well as oil and gas pipes.
Written by Olivia Zhang, zhangwd@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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