China’s Economic Slowdown: Baosteel’s Net Profit in the Third Quarter Drops by Over 60%

Amid the continued downturn of the Chinese economy, steel companies have experienced a double decline in revenue and net profit in the third quarter. The largest steel enterprise, Baosteel Group under the China Baowu Steel Group, witnessed a 64.77% year-on-year decrease in net profit, hitting the lowest point so far this year.

On the evening of October 29, Baosteel disclosed its third-quarter report, revealing that the company’s operating income for the first three quarters of this year amounted to 242.856 billion yuan, a decrease of 4.77% compared to the same period last year. Net profit attributable to shareholders of the listed company was 5.882 billion yuan, down 29.56% year-on-year, with basic earnings per share at 0.27 yuan, a decrease of 28.95%.

In the third quarter alone, the company’s revenue was 79.605 billion yuan, a 6.53% decrease year-on-year, and net profit attributable to shareholders of the listed company was 1.338 billion yuan, down by 64.77%. Both revenue and net profit in the quarter reached their lowest points this year.

Baosteel attributed the decline in third-quarter performance to steel prices falling more sharply than raw material prices, leading to continuous compression of profit margins. Additionally, China’s GDP growth slowed in the third quarter, maintaining a situation of weak supply and demand in the steel industry.

The report also mentioned that in the first three quarters of this year, the company produced 36.676 million tons of iron, 39.611 million tons of steel, and sold 38.504 million tons of semi-finished products.

Public data indicates that China Baowu Steel Group Limited (referred to as Baowu Group) was formed by the merger of the original Baosteel Group Limited and Wuhan Iron and Steel (Group) Corporation, and is under the supervision of the State-owned Assets Supervision and Administration Commission of China. Following the acquisition (non-cash transfer of stock rights) of controlling interests in multiple Chinese steel companies, the enterprise has become the world’s largest steel producer.

Recently, several Chinese steel companies have released their third-quarter financial reports. From these reports, it is evident that their revenues and net profits have generally experienced a double-digit decline so far this year, with the third quarter particularly severe.

According to reports by The Paper, in the third quarter, Nangang Steel had a 19.72% year-on-year decrease in revenue and a 23.06% decrease in net profit attributable to shareholders of the listed company; Zhongxin Special Steel recorded a 5.66% decrease in revenue and a 16.77% decrease in net profit; Fangda Special Steel saw a 3.01% decrease in revenue and a staggering 91.34% decrease in net profit; Bayi Iron & Steel reported a 17.25% decrease in revenue and a 2342.39% decrease in net profit attributable to shareholders of the listed company.

The China Iron and Steel Industry Association announced on October 25 that profits of key statistics for steel enterprises in the first three quarters of this year fell by 56.39% year-on-year, indicating a significant decline in industry profitability.

During an economic operation symposium for some steel enterprises in the third quarter held in Beijing, officials from China Baowu, Ansteel Group, and other 18 steel companies pointed out that the steel industry currently exhibits an overall trend of “three highs and three lows” (high production, high costs, high exports; low demand, low prices, low profitability).