Baosteel net profit in H1 slumped nearly 93%

August 31 MetalBiz--On August 30, reporters learned from Baosteel, the first steel giant, its net profit was 669mln yuan in H1, down 92.77% over the 9.225bln yuan in the same period last year.

The half-year report from Baosteel can be taken as the reference of steel enterprises' dramatic drops in H1 in China. Although the steel market in H1 gradually stabilized, generally speaking, it is still in the bottom. According to the notice, in H1, the domestic steel market displayed a state of "recovering demand, rebounding price in fluctuation and serious demand shrinkage" and the whole industry is in the edge of the losses. As for supply and demand, the domestic steel structure in H1 degraded and the proportion of general-purpose steel increased, while the high value-added products declined.

The notice showed that due to the significant demand falling of major products from Baosteel in the target market y-o-y, the capacity utilization rate of the billet was only 81% over the same period last year. Meanwhile, the steel price was in low level based on the tendency of Q4 last year and the gross profit margin t fell 15.6% year on year.

The 18.3% decrease of product sales and 15.6% decline of gross profit y-o-y made Baosteel's profits from main business slumped year on year. Nevertheless, during the period of the report, it realized 630mln yuan of investment income, up 6.1% year on year.

In view of H2, Baosteel believed that the global economy has not yet recovered substantially and the foundation on the domestic economic recovery is not solid, so whether the steel industry can rebound constantly is a doubt. It is predicted that the net profit in Q3 dropped significantly compared with the same period last year.