Posted on 05 May 2023
Net profits at Baoshan Iron & Steel Co., Ltd. (Baosteel), the listed arm of the world's largest steelmaker China Baowu Steel Group, plunged by 48.4% last year to Yuan 12.19 billion ($1.76 billion) on a consolidated basis, the company announced in its 2022 annual report released on April 27.
Last year, the global economic downturn caused by the ongoing pandemic, rising inflation and geopolitical conflicts had a major impact on China's steel industry generally, Baosteel explained in the report, adding that the industry suffered extensive losses due to high production costs and low domestic steel demand.
Despite the on-year decline in its net profits, Baosteel still ranked first in pre-tax profits among all Chinese steel mills last year, with the total reaching Yuan 15.04 billion.
During last year, Baosteel's total sales of steel products increased by 6.9% to 49.76 million tonnes, with its core products enjoying a more than 50% market share, the report pointed out. Significantly, Baosteel did not reveal its actual steel output last year. However, the company had earlier predicted that hot metal production would reach 46.87 million tonnes in 2022, crude steel output would top 51.48 million tonnes and total sales would reach 49.75 million.
Outside of China, though the Shanghai-based steel giant lauded some successes in export markets last year, exports contribute hardly anything to its overall business. In 2022, the company exported just 3.98 million tonnes of steel products in total, lower by 0.2% on year.
In its report, the company hailed the fact that steel exports to Europe, Africa, and the Middle East region exceeded 1 million tonnes for the first time – they totalled 1.06 million tonnes – while exports of 800,000 tonnes to buyers in East Asia and Australia marked the second highest total to these markets since 2008, the release added.
With the global economy still facing uncertainties and challenges, Baosteel warned in the report that Chinese steel demand will continue to decline in 2023 but that central government policies to support the domestic economy will see the pace of the demand decline slow.
This year, Baosteel plans to produce 48.77 million tonnes of hot metal and 50.89 million tonnes of crude steel. At the same time, it aims to sell 51.21 million tonnes of steel products.
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.
Meanwhile, during Q1 this year Baosteel's net profits slumped by a further 50.56% on year to Yuan 1.85 billion, according to the mill's quarterly report also released on April 27.
Nevertheless, the company's business performance was still impressive, given that most Chinese steelmakers recorded huge losses, mainly due to the sharp falls in steel prices and high price levels of raw materials.
For example, Angang Steel Co, the Shenzhen-listed arm of China's second-largest steelmaker Ansteel Iron & Steel Group, saw its Q1 profits tumble by 110.1% on year and forced it to post a net loss of Yuan 149 million, according to the company's latest report release.
By the end of Q1 on March 31, China's national price of HRB400E 20mm dia rebar was assessed by Mysteel at Yuan 4,292/tonne including the 13% VAT, lower by Yuan 46/t from January 31, while Mysteel SEADEX 62% Australian Fines dipped by just $1.2/dmt to $127.8/dmt CFR Qingdao over the same period.
Source:Mysteel Global
