(Bloomberg) -- Baoshan Iron & Steel Co., the listed unit of the world’s biggest steel producer, warned of growing pressures on the industry after reporting profit that held up relatively well in the first half of 2024.
Net income for the first six months was little changed versus a year earlier at 4.6 billion yuan ($639 million), the Chinese company known as Baosteel said in a filing on Tuesday. Revenues fell 3.9% to about 163 billion yuan.
The Chinese steel industry is facing challenges as the world’s second-largest economy moves away from construction-led growth, hitting demand for the metal. Baoshan’s parent China Baowu Steel Group Corp. warned earlier this month that situation was more severe than in previous challenging periods in 2008 and 2015.
“The steel industry has shown an overall trend of strong supply, weak demand, high costs, and low prices,” Baosteel said. “In the second half of the year, the steel industry will maintain a situation of oversupply, and steel companies will continue to face pressure in their operations.”
Baosteel noted that the main drivers of demand growth were now in shipbuilding, new energy and other areas. The company’s relatively resilient performance contrasts with a more challenging situation across the rest of the industry.
BHP Group Ltd., the world’s biggest miner, flagged “an uneven recovery” in China in its earnings statement on Tuesday. Losses at Chinese mills, which produce more than half of the world’s steel, swelled to 2.8 billion yuan ($393 million) in the first seven months of the year.
Exports, a key channel for soaking up China’s surplus, are under threat from trade restrictions. Canada became the latest country to impose tariffs on China this week, slapping a 25% import levy on steel. China shipped more than 53 million tons of steel in the first half, the most since 2016, although exports have receded since March.
“Due to the increase in tariff barriers and the rise of international trade protectionism, exports will be faced with uncertainties,” Baosteel said.
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