China’s Baosteel sees pressure after steady first half profit

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China’s Baosteel sees pressure after steady first half profit

The world’s biggest steel producer Baoshan Iron & Steel Co has warned of growing pressures on the industry despite profit holding up well in the past six months.

Net income for the first six months was little changed versus a year earlier at 4.6 billion yuan ($639 million), the ******** company known as Baosteel said in a filing on Tuesday.

Revenues fell 3.9 per cent to about 163 billion yuan.

The ******** steel industry is facing challenges as the world’s second-largest economy moves away from construction-led growth, hitting demand for the metal.

Baoshan’s parent China Baowu Steel Group Corp. warned earlier this month that the situation was more severe than in previous challenging periods in 2008 and 2015.

“The steel industry has shown an overall trend of strong supply, weak demand, high costs, and low prices,” Baosteel said.

“In the second half of the year, the steel industry will maintain a situation of oversupply, and steel companies will continue to face pressure in their operations.”

Baosteel noted that the main drivers of demand growth were now in shipbuilding, new energy and other areas.

The company’s relatively resilient performance contrasts with a more challenging situation across the rest of the industry.

BHP — the world’s biggest miner — flagged “an uneven recovery” in China in its earnings statement on Tuesday.

Losses at ******** mills, which produce more than half of the world’s steel, swelled to 2.8 billion yuan ($393 million) in the first seven months of the year.

Exports are under threat from trade restrictions.

Canada became the latest country to impose tariffs on China this week, slapping a 25 per cent import levy on steel.

China shipped more than 53 million tons of steel in the first half, the most since 2016, although exports have receded since March.

“Due to the increase in tariff barriers and the rise of international trade protectionism, exports will be faced with uncertainties,” Baosteel said.

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