China’s top listed steelmaker, Baosteel Iron and Steel Co Ltd reported a 43.6 percent drop in net profit for the first quarter. The net income for Baosteel for January-March feel to 1.54 bln yuan from 2.73 billion a year before. The company produced 11.8 million tonnes of steel and 11.1 million tonnes of iron in the first quarter.
Baosteel said “Due to the extended Spring Festival holidays and spreading new coronavirus pandemic at home and abroad, domestic demand for steel products dropped obviously,” and added that steady iron ore prices also dragged down profit at its mills.
The company further said that profits were also pressured by high supply levels and weak demand for vehicles and containers.
The company expected demand for steel sheets to further drop in the second quarter on low utilization rates at downstream sectors as well as high inventory levels, which could narrow its procurement and sales price spread and hit its first-half earnings.
The company said, “We will further expand in the market, strengthen the linkage between production and sales, and tap potential for cost cuts… to lower the impact on our operation brought by the coronavirus”.
China witnessed a decline in vehicle sales by 8.2 percent in 2019 and decreased by 42.4percent in the first quarter.
The company aims to produce 43.43 million tonnes of iron and 46.36 million tonnes of steel in the year 2020 and to achieve a total income of 270.4 billion yuan.
Source: Reuters
