Baoshan Iron & Steel Co Ltd (Baosteel), China’s top listed steelmaker, reported its highest ever quarterly net income on Friday, helped by the post-pandemic demand recovery and global monetary policy stimulus.
Net profit surged 276.76% to 15.08 billion yuan ($2.33 billion) in the first half of the year from the same period a year earlier, a company filing to the Shanghai Stock Exchange showed.
That indicates a second-quarter profit of 9.68 billion yuan, up 79% from the first quarter, Reuters calculations show.
“In the first half the domestic economy was good and downstream steel demand was robust,” the company said, noting steel consumption in Europe and the United States also rose significantly.
Fuelled by easing monetary policy and carbon emissions reduction targets, steel prices also jumped, Baosteel added.
In the first six months of 2021, the company produced 22.74 million tonnes of iron and 26.23 million tonnes of steel.
China’s steel sector was one of the best performers this year amid sky-rocketing commodity prices, propped up by global economic stimulus and supply concerns as the country vows to limit annual crude steel production to reduce carbon emissions.
Prices for steel rebar used in construction and hot rolled coils for manufacturing products both hit record highs in mid-May and had gained 18% and 26%, respectively, so far this year.
Other listed arms under Baosteel’s parent China Baowu Group also logged a stellar first half, seeing their net profit soaring from four-fold to more than 20 times.
However, Baosteel said domestic steel prices could fall in the second half of the year amid uncertainty over the coronavirus pandemic and China’s steel-cutting plans, though steel demand could see a short-term rebound in the fourth quarter.
China’s economic growth is also showing signs of returning to longer-term trends after a robust start to the year.
The company has approved plans to boost its silicon steel production in two phases, aiming for high-end oriented silicon steel capacity of 1.5 million tonnes per year and annual non-oriented silicon steel capacity of 3.8 million tonnes. Silicon steel is used in electric motors, generators and transformers.
Baoshan’s shares in Shanghai have climbed 53% so far this year.
Source: Reuters (Reporting by Min Zhang and Shivani Singh; editing by Jason Neely and Kim Coghill)