Chinese Steel Giant Defies Market Headwinds
China's largest listed steelmaker has delivered asurprisingly strong quarterly performance despite challenging marketconditions. Baoshan Iron & Steel Co (Baosteel) reported a 26.4%year-on-year increase in first-quarter net profit, reaching 2.43 billion yuan($333.43 million), up from 1.93 billion yuan in the same period last year.
The positive quarterly results come despite what thecompany described as "weak demand and falling steel prices" in itsfiling to the Shanghai Stock Exchange on Friday. This performance stands instark contrast to the company's full-year results for 2024, which saw a 38.4%decline in net profit to 7.36 billion yuan.
Cost Advantage Drives Profitability
Baosteel attributed its improved quarterly performance to afavorable cost structure resulting from the disproportionate decline in rawmaterial prices compared to finished steel prices. While steel prices fell 9.9%during the quarter, the company benefited from a much steeper 36.1% drop incoking coal prices, a key input in steel production.
This widening margin between input costs and product pricesallowed Baosteel to maintain profitability despite the challenging demandenvironment. The company's ability to leverage these market dynamicsdemonstrates the importance of cost management in the highly cyclical steelindustry.
Production Volume and Outlook
During the first quarter of 2025, Baosteel reportedproduction of 11.55 million metric tons of iron and 12.85 million tons ofsteel. Looking ahead, the company has set ambitious production targets for thefull year 2025, aiming to produce 48.79 million tons of iron and 52.61 milliontons of steel.
Key Takeaways:
• Baosteel reported a 26.4% year-on-year increase in Q12025 net profit to 2.43 billion yuan ($333.43 million), despite challengingmarket conditions.
• The profit growth came despite falling steel prices (down9.9%) thanks to an even steeper decline in coking coal prices (down 36.1%),creating favorable cost dynamics.
• The company's full-year 2024 results showed a 38.4%decline in net profit to 7.36 billion yuan, highlighting the significance ofthe Q1 2025 turnaround.
• Baosteel produced 11.55 million metric tons of iron and12.85 million tons of steel in Q1 2025.
• The company has set production targets of 48.79 milliontons of iron and 52.61 million tons of steel for the full year 2025.
• Baosteel explicitly warned about "persistent risksfrom rising trade tensions" in its outlook, reflecting growing concernsabout protectionist measures targeting Chinese steel.
• The company is a subsidiary of state-owned China BaowuSteel Group, the world's largest steelmaker by output.
