Baosteel reports 6.3% on-year decline in H1 net profits

Baoshan Iron & Steel Co., Ltd. (Baosteel), the listed arm of the world's largest steelmaker by capacity, China Baowu Steel Group (Baowu), saw its net profits for the first half of 2026 fall by 6.3% 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 its net profits to elevated raw material costs and weak finished steel prices, with their price spreads continuing to narrow in the first half.

"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 H1.

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

However, even against this backdrop, Baosteel still saw its steel exports jump by a considerable 24.8% on year to total 4.14 million tonnes, mirroring the growing importance of overseas business to its profit growth, especially against a weak domestic steel market, Mysteel Global notes.

Total finished and semi-finished steel sold by Baosteel at home and abroad in H1 reached 25.68 million tonnes, up by a small 1.5% on year, with the increase largely made possible by the company's robust export performance.

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

For Baosteel's flagship cold-rolled products like electrical steel, its CR segment saw its gross profit margin decrease by 2.7% on year to only 4.9% in H1, according to the report, while the gross profit margin for its hot-rolled products increased slightly by 1.5% to 6.7% over the same period.

Meanwhile, Baosteel's total business revenues reached Yuan 160.73 billion in H1, meeting 47.8% of its planned Yuan 330 billion target for 2026, Mysteel Global noted.

In the wake of its rather mediocre performance during the January-June half, 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, 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, heavy plate, oil and gas pipes, and high-end flat steel such as electrical steel and tinplate. Its consolidated results include the performances of its 12 subsidiaries, Mysteel Global notes.

Source:Mysteel Global