China’s biggest listed steel producer Baoshan Iron & Steel Co Ltd (Baosteel) on Monday said it expects cost pressure to ease with the implementation of government-mandated steel production cuts.
“The company has always stuck to a low-inventory strategy. As the country is carrying out policies to restrict crude steel output, the supply and demand of iron ore has reversed significantly,” Baosteel Chairman Zou Jixin said in an online briefing.
Zou also said iron ore prices have entered a downward channel.
Iron ore prices surged earlier this year, with the benchmark futures contract on the Dalian Commodity Exchange rising 38.5per cent in January-June, propped up by robust steel demand and easing liquidity.
However, the price of the steelmaking ingredient has fallen 20.8per cent in the last two months as the government stepped up steel production controls to reduce carbon emissions from the ferrous metals sector.
Being affected by the curbs, Baosteel said it would adjust production, strengthen its raw material purchase strategy and work to maintain relatively good profitability.
The steelmaker posted stellar net income for the first half of 2021 last week and logged its best-ever quarterly profit.
The company also said it had reduced exports of steel products following government policy but still sees higher annual exports after a jump in the first half of the year supported by strong overseas demand.
Source: Reuters (Reporting by Min Zhang and Dominique Patton; Editing by Christopher Cushing)