Baosteel H1 Net Profit Falls 6.3% as Raw Material Costs Pressure Margins

Baosteel's first-half net profit fell to Yuan 4.57 billion ($680 million) as iron ore and coking coal costs rose while finished steel prices weakened, even as the company's steel exports climbed 24.8% year on year.

By Anil Mathews
Published August 26, 2026

Baoshan Iron & Steel Co., Ltd. (Baosteel), the listed arm of China Baowu Steel Group (Baowu), saw its net profit for the first half of 2026 fall 6.3% year on year to Yuan 4.57 billion ($680 million), according to the company's latest mid-year report released on August 22.

The Shanghai-based mill mainly attributed the decline in net profit to elevated raw material costs and weak finished steel prices, with price spreads continuing to narrow during the first half.

Higher Raw Material Costs Squeeze Steel Margins

'In the first half of the year, the Platts 62% iron ore index averaged $107.6/tonne, up 6.9% on year. At the same time, the benchmark price for coking coal in Lüliang, Shanxi, came in at Yuan 1,499.3/tonne, a sharp 23.1% increase from a year earlier, as tightening coal supply kept pushing its prices higher,' the report observed.

'Over the same period, the China Steel Price Index (CSPI), published by the China Iron and Steel Association, averaged 92.5, edging down 1.3% on year,' it added.

The report also cited a deteriorating external environment as another factor, as protective trade measures including the EU's Carbon Border Adjustment Mechanism and export quotas further restrained China's steel exports in the first half.

China's total steel exports by volume worldwide dropped 4.4% year on year to 65 million tonnes over January-July, China's Customs showed.

Baosteel Exports Rise 24.8% Despite Broader Decline

Against this backdrop, Baosteel's steel exports jumped 24.8% year on year to 4.14 million tonnes, reflecting the growing importance of overseas business to its profit growth amid a weak domestic steel market, Mysteel Global notes.

Total finished and semi-finished steel sold by Baosteel at home and abroad in the first half reached 25.68 million tonnes, up 1.5% year on year, with the increase largely supported by the company's export performance.

Flat steel products accounted for 22.28 million tonnes, or 87%, of Baosteel's total sales volume. Pipes and other steel products accounted for the remaining 13%, Mysteel Global learned.

Cold-Rolled Margin Falls as Hot-Rolled Margin Improves

For Baosteel's flagship cold-rolled products, including electrical steel, the segment's gross profit margin decreased by 2.7% year on year to 4.9% in the first half, according to the report.

The gross profit margin for hot-rolled products increased by 1.5% to 6.7% over the same period.

Baosteel's total business revenue reached Yuan 160.73 billion in the first half, meeting 47.8% of its planned Yuan 330 billion target for 2026, Mysteel Global noted.

Baosteel Targets Cost Cuts and Production Synergies

Following its January-June performance, the company pledged to 'proactively respond' to industry headwinds by deepening internal reforms, strengthening synergies across production bases and continuing to drive cost-reduction initiatives, according to the report.

Baoshan Steel manages four production bases in China: its Baoshan works in East China's Shanghai, Qingshan in Central China's Wuhan, Dongshan in Zhanjiang in South China's Guangdong, and Meishan in East China's Jiangsu.

Its key products include auto sheet, heavy plate, oil and gas pipes, and high-end flat steel such as electrical steel and tinplate. Its consolidated results include the performances of 12 subsidiaries, Mysteel Global notes.

Source:Mysteel Global