According to the performance forecast for 2024 that has been recently released, the overall loss trend of Chinese listed steel companies is intensifying. Recently, Chongqing Iron and Steel Co., Ltd. (referred to as “Chongqing Iron and Steel”) released its performance forecast for 2024, predicting a full-year net loss attributable to parent company of 3.253 billion yuan, a significant increase from the loss in 2023.
The announcement indicated that Chongqing Iron and Steel expects a net loss attributable to the parent company of around 3.253 billion yuan in 2024, and an adjusted net loss attributable to the parent company of around 3.264 billion yuan. In the first three quarters of 2024, the operating income of Chongqing Iron and Steel was 20.598 billion yuan, a year-on-year decrease of 31.37%; the net loss attributable to the parent company was 1.35 billion yuan.
Regarding the substantial net loss in 2024, Chongqing Iron and Steel explained that the domestic steel industry in 2024 still presented a pattern of “high output, high costs, high inventory, low demand, low prices, low profitability”, with the industry as a whole being at the bottoming stage. Orders and demand continued to be weak, with supply outpacing demand, and bulk raw material prices still running at high levels. The actual downward shift in cost center was smaller than the decline in steel prices, resulting in continuous narrowing of market prices at both ends of procurement and sales. Meanwhile, the company plans to make provision for asset impairment, leading to losses during the reporting period.
According to public information, Chongqing Iron and Steel Group Company is a centrally-administered state-owned steel enterprise of the Communist Party of China, ranked 259th among China’s top 500 enterprises in 2004. In 2016, Chongqing Iron and Steel’s net assets turned negative. In 2017, Chongqing Iron and Steel entered bankruptcy reorganization proceedings.
After the reorganization in 2017, Chongqing Iron and Steel briefly returned to profitability, but following the debt crisis of the Evergrande Group in 2021 triggering the real estate industry, Chongqing Iron and Steel entered a downturn along with the industry as a whole.
The company reported net losses of 1.019 billion yuan and 1.494 billion yuan in 2022 and 2023 respectively. Now, with the forecast of a huge loss in 2024 by Chongqing Iron and Steel, the company may face a situation of three consecutive years of net loss.
In fact, the forecasted performance loss by Chongqing Iron and Steel is a microcosm of the performance of Chinese listed steel companies in 2024.
According to the “Daily Economic News”, among the listed steel companies that have already released their 2024 performance forecasts, Sansteel Mingguang, Linggang Co., Ltd., Bayi Iron & Steel and Shandong Iron & Steel all saw an increase in net losses in 2024 compared to 2023, Hangzhou Iron & Steel changed from profit to loss year on year in 2024, and Wujin Stainless Steel and Fushun Special Steel, which remained profitable in 2024, also experienced a significant decline in their net profits.