Chart of the Day: China’s Increasingly Embattled Steelmakers

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Weakening steel demand and a subsequent drop in prices pushed China’s top mainland-listed steelmakers to report tumbling profits or expanding losses in the first half, although by widely divergent amounts.

Shanghai-listed Inner Mongolia BaoTou Steel Union Co. Ltd. (600010.SH) suffered the steepest decline, with its net profit attributable to shareholders plunging 73.8% to 108 million yuan ($15.2 million) in the six months through June, according to its earnings report.

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China's top steelmakers reported significant profit declines or losses in the first half of 2024 due to weakening steel demand and dropping prices, with Inner Mongolia BaoTou Steel Union Co. Ltd. seeing a 73.8% decrease in net profit.
Steel consumption in China fell by 3.3% year-on-year to approximately 479 million tons, despite government efforts to revitalize the economy.
Only six out of 35 mainland-listed steelmakers posted profit increases or returned to profitability, while others faced wider net losses or new losses.

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Who’s Who

Inner Mongolia Baotou Steel Union Co. Ltd.: Inner Mongolia Baotou Steel Union Co. Ltd., listed on the Shanghai Stock Exchange (600010.SH), experienced a sharp decline in profits, with net profit attributable to shareholders plunging 73.8% to 108 million yuan ($15.2 million) in the first half of the year. The company attributed this poor financial performance to a drop in steel prices driven by weak demand from the property and infrastructure sectors.

Tianjin You Fa Steel Pipe Group Stock Co. Ltd.: Tianjin You Fa Steel Pipe Group Stock Co. Ltd. (601686.SH) experienced a double-digit profit decline in the first half of the year due to weakening steel demand and falling prices, as reported in the article.

Fangda Special Steel Technology Co. Ltd.: Fangda Special Steel Technology Co. Ltd. (600507.SH) experienced a double-digit profit hit in the first half of the year due to weakening steel demand and falling prices. Their financial performance was negatively affected by reduced production capacity amid a challenging operating environment in the steel industry.

Hunan Valin Steel Co. Ltd.: Hunan Valin Steel Co. Ltd. (000932.SZ) experienced a double-digit profit hit in the first half of 2024 due to weakening steel demand and a drop in prices. This decline was part of a broader trend affecting multiple Chinese steel producers.

Xinxing Ductile Iron Pipes Co. Ltd.: Xinxing Ductile Iron Pipes Co. Ltd. (000778.SZ) is one of the steel producers that experienced a double-digit profit hit in the first half of the year due to weakening steel demand and falling prices, as reported in the article.

China Baowu Steel Group Corp. Ltd.: China Baowu Steel Group Corp. Ltd. Chairman Hu Wangming indicated at a mid-year work review conference that the steel industry's challenges are severe, with reduced production capacity amid weak demand. An executive from its subsidiary, Baoshan Iron & Steel Co. Ltd., expects further difficulties in the third quarter due to infrastructure project delays, local government financing issues, and weak demand from the construction machinery sector.

Baoshan Iron & Steel Co. Ltd.: Baoshan Iron & Steel Co. Ltd. (600019.SH), a subsidiary of China Baowu Steel Group, anticipates tougher conditions in Q3 2024. Delays in infrastructure projects due to hot and rainy weather, local government financing issues, and weak demand from the sluggish real estate and construction machinery sectors are expected to exacerbate the situation.

Guangdong Zhongnan Iron & Steel Co. Ltd.: Guangdong Zhongnan Iron & Steel Co. Ltd. (000717.SZ) reported a net loss of 449 million yuan in the first half of the year, swinging from a 3.1 million yuan profit a year ago.

Shandong Iron and Steel Co. Ltd.: Shandong Iron and Steel Co. Ltd. (600022.SH) reported a significant increase in its net loss, nearly quadrupling to 968 million yuan in the first half of the year. This performance marks a stark contrast to the profits or reduced losses of some other steelmakers in the industry.

Nanjing Iron & Steel Co. Ltd.: Nanjing Iron & Steel Co. Ltd. (600282.SH) reported a profit jump in the first half of 2024 due to effective cost-cutting measures. It was one of the only six mainland-listed steelmakers to see improved profitability during this period.

Yongjin Technology Group Co. Ltd.: Yongjin Technology Group Co. Ltd. (603995.SH) reported a profit jump in the first half of 2024. The company attributed its strong performance to increased production capacity brought about by two new projects.

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What Happened When

First quarter of 2024：: The combined profits generated by the China Iron and Steel Association’s member steelmaking companies plunged 47.9% year-on-year to about 8.7 billion yuan.

First half of 2024：: China’s top mainland-listed steelmakers reported tumbling profits or expanding losses.

First half of 2024：: Guangdong Zhongnan Iron & Steel Co. Ltd. (000717.SZ) reported a net loss of 449 million yuan, compared with a 3.1 million yuan profit a year ago, and Shandong Iron and Steel Co. Ltd. (600022.SH) saw its net loss nearly quadruple to 968 million yuan.

First six months of 2024：: Approximate steel consumption in China was about 479 million tons, down 3.3% year-on-year.

In the six months through June 2024：: Net profit of Inner Mongolia BaoTou Steel Union Co. Ltd. (600010.SH) attributable to shareholders plunged 73.8% to 108 million yuan.

Late June 2024：: The China Steel Price Index stood at around 103 points, down nearly 10 points from the end of 2023.

July 2024：: China Baowu Steel Group Corp. Ltd. Chairman Hu Wangming described the steel industry's situation as a severe winter at a mid-year work review conference.

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