China's top steel producer Baosteel ekes out first-half profit

25 August 2015

Baoshan Iron & Steel , China's biggest listed steel company, reported a modest increase in first-half profit on Monday, citing easing demand in its domestic market.

China's steel sector is grappling with chronic overcapacity, tougher environmental measures and an economic slowdown that is hitting demand for industrial metals.

"The steel sector has entered its usual winter mode as demand for downstream products sees slowing growth, competition intensifies and environmental requirements become more stringent," Baosteel said.

Net profit in the six months to June 30 rose 0.65 percent year on year to 3.17 billion yuan ($495.1 million), the company said in a filing on the Shanghai stock exchange.

Chinese crude steel output fell 4.6 percent to 65.84 million tonnes in July from a year ago, government data showed this month, as steel mills in the world's top producer faced tumbling prices and faltering demand.

With steel prices at 20-year lows, members of the China Iron & Steel Association (CISA) -- consisting of about 100 large and medium-sized mills -- suffered aggregate losses of 21.68 billion yuan from their core steel business in the first half of the year.

Steel prices have plummeted 25 percent since the start of the year, dampening iron ore prices .IO62-CNI=SI by 21 percent over the period.

Producers are likely to suffer further losses in the second half of 2015, squeezed by credit restrictions and pressures to repay existing debts while demand is expected to remain subdued.

China's Hangzhou Iron and Steel said last week that it suffered a net loss of 296.2 million yuan in the first half, compared with an 8.9 million yuan profit in the same period last year.