Baotou Group’s iron production declined by 0.85pc to 7.13mn mt in the first half of 2020, according to company’s results. The company’s steel production stood at 7.33mn mt, a drop of 2.53pc while commercial billet production in the period stood at 6.65mn mt, a fall of 1.84pc.

 

The company’s operating income fell by 7.77pc to CNY27.95bn and profit plunged by 78.11pc to CNY315mn. The decline in profits and income was a result of increased manufacturing costs and steel prices hovering low. China Iron and Steel Association suggested the country’s steel price index in Jan-June 2020 was at 101 points, a fall of 7.7pc from the prior-year period. The index for long products fell by an average of 8.2pc while that for plates declined by 7.5pc.

 

The price decline was also due to the country’s steel capacity. According to the data from the National Bureau of Statistics, the national output of pig iron rose by 2.2pc to 432.68mn mt, 60,586mt in the Jan-June period. Exports, however, declined as the world dealt with the impact of the COVID-19 pandemic. With the domestic demand now on the path of recovery, the country’s steel consumption has started to increase, and stockpiled inventory has started to dip as supply-side reforms have been initiated.

 

The mill owners stated though these reforms have started to pay-off, the issue is not completely resolved. The company is thus adopting a ‘four drops and two raises project’.

 

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