Japan Metal Daily: The three major East Asian steel companies, China’s Baowu Steel Group, South Korea’s POSCO Holdings, and Taiwan’s China Steel are expected to face significant challenges in the second half of 2024. Oversupply in China, coupled with sluggish demand and a deteriorating market environment, are the primary drivers of these difficulties.
To address declining demand and excess supply, Baowu Steel and China Steel have announced price reductions for their domestic steel products. These reductions are aimed at stimulating sales and mitigating the impact of market conditions.
Stakeholders are increasingly concerned about the companies’ prospects and are calling for more drastic measures, such as filing anti-dumping lawsuits against Chinese steel and consolidating or closing facilities.
Baowu Steel Group performance
The total consolidated profit of Baowu Steel Group for the first half of 2024 was approximately 9 billion yuan (around JPY 180 billion), which is about 4.5 times higher than the same period last year. Although Baoshan Steel contributed 6-7% of the revenue, group companies other than Baoshan Steel also contributed to profits.
However, earnings have gradually begun to decline and are expected to fall further in the second half of the year. Chinese automakers other than Baowu are expected to face further challenges, and attention will be paid to how they will implement structural adjustments on the supply side.
POSCO Holdings performance
The consolidated operating profit of POSCO HD for the first half of 2024 was KRW 1.4 trillion, which is a decrease of 30% y-o-y compared to the same period in the previous year. The operating income in the steel business decreased by nearly 40% y-o-y to KRW 836 billion (about JPY 92 billion) against last year. The overseas steel business contributed only KRW 24 billion (JPY about 2.6 billion) to earnings. The rechargeable battery materials business is still incurring losses. While. the infrastructure division, such as POSCO International, earned KRW 769 billion, which helped to support the consolidated results.
China Steel performance
The consolidated operating profit of CSC for the period January to June 2024 was approximately NT$2.1 billion (approximately JPY 9.5 billion), which is an increase of nearly 50% y-o-y compared to the same period last year. This increase was due to factors such as improved sales prices and reduced costs, as well as an increase in dividends from mines and other sources. Despite the significant increase in profits, the level of profitability, as measured by operating profit margins, remains low, indicating that further efforts to improve profitability are needed.
Note: This article has been written in accordance with an article exchange agreement between Japan Metal daily and BigMint.
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