Surging prices of alloys, nonferrous metals and energy have “significantly” dented the profitability of Baoshan Iron & Steel, the top Chinese steelmaker said, without providing further details of the impact.
Due to carbon and environmental curbs and the Russia-Ukraine conflict, the prices of commodities scaled fresh highs and affected profitability, the steelmaker said in a Shanghai Stock Exchange filing released on Wednesday night.
The steel giant, known as Baosteel, noticed that the industry is gradually recovering from the low ebb seen in the fourth quarter of 2021, when production and consumption were sluggish.
Downstream demand from vehicles and shipbuilding sectors has been strong, and Chinese steel producers have also ramped up exports of hot-rolled coils to address the supply shortage in Europe fuelled by the Ukraine crisis, Baosteel said.
The company added that it’s still a struggle for the sector to match performances from the year-ago period.
“Generally speaking, [the steel sector] in the first half of 2021 was more driven by demand, while this year is more propelled by costs,” said Baosteel.
Futures prices of hot-rolled coils, used in the manufacturing sector, have gained around 15% so far this year. Iron ore and coking coal prices jumped more than 20% and 30%, respectively.
- Reuters, with additional editing by George Russell
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