[SMM Hot Topic] Steel Companies' Semi-Annual Earnings Previews Released: Half in Profit, Half in Loss

[SMM Hot Topic] Steel Companies' Semi-Annual Earnings Previews Released: Half in Profit, Half in Loss

In the first half of 2025, downstream demand in the steel industry remained in the doldrums, with steel prices fluctuating downward. The steel industry as a whole faced a situation of "weak supply and demand," with a slow market start and demand falling short of expectations, thereby affecting the sales performance of various steel companies.

Summary of Earnings Previews for 23 Steel Companies in the First Half of 2025

Based on the semi-annual earnings previews for 2025 disclosed by 23 steel companies, the profit levels of these companies have been evenly split between profit and loss since the beginning of the year. Specifically, 11 steel companies have seen a decline in net profit compared to last year, while 12 have achieved growth. Meanwhile, 13 steel companies have experienced a downward trend in net profit excluding non-recurring gains and losses, with 10 achieving growth.

Among them, Shougang Iron & Steel Group Co., Ltd., which reported both attributable net profit and net profit excluding non-recurring gains and losses as profitable in its semi-annual earnings preview, stated, "Due to the company's commitment to innovation-driven development, continuous optimization of product and customer structures, and efforts to build a competitive edge in 'manufacturing + services,' the production and sales volumes of strategic products have increased year-on-year. The company's production has been smooth and stable, and through continuous benchmarking with leading enterprises, it has fully tapped into the potential for cost reduction across all elements, effectively lowering production costs and offsetting external market factors that reduce profits. As a result, the company's operating performance in the first half of 2025 has increased year-on-year."

Liuzhou Iron & Steel Co., Ltd., which also achieved profitability, stated, "By strengthening the overall coordination of 'production, supply, marketing, and transportation,' the company has continuously promoted cost reduction through raw material procurement and process innovation. It has advanced the transformation towards high-end, intelligent, and green development, cultivated and developed new quality productive forces, optimized production lines and product structures, intensified efforts to expand export markets, and further increased market share, achieving positive and excellent development against the complex industry situation."

Benxi Iron & Steel Plate Co., Ltd., which has been facing poor operating conditions, reflected, "Although the company has adhered to a profit-centered management approach, focusing on quality improvement and efficiency enhancement, and has taken measures such as concentrating on core strategic products, increasing sales of automotive sheets and sales to original equipment manufacturers, and focusing on key areas of home appliances to lock in top-tier enterprises in the industry to enhance market competitiveness, the company's profit in this period has significantly reduced losses compared to the second half of last year. However, due to the lack of significant improvement in the price spread between procurement and sales, the company's operating performance in the first half of the year failed to achieve profitability."

Linggang Iron & Steel Co., Ltd., which is also facing difficulties, stated, "In the first half of 2025, the steel industry's situation of strong supply and weak demand has not significantly changed, with steel prices continuing to decline and bulk raw material and fuel prices also falling. Although the company has taken various measures to reduce costs and increase efficiency, it has still been unable to reverse the loss situation due to the impact of the 1-4# blast furnace capacity replacement project and the ultra-low emission transformation project coming into operation."

Outlook

In summary, based on the semi-annual earnings previews for 2025 released by multiple publicly listed steel companies, both companies expecting earnings growth and those incurring losses have mentioned the issues of steel price changes and production cost control in the first half of the year in their reports. This underscores the crucial role of cost reduction and efficiency enhancement in the performance of steel companies.

Recently, with the high-level's proposal to "combat the 'rat race' competition," market liquidity has been activated, and the capital market has been continuously trading on related logic. The ferrous metals market has reversed its downturn, with prices surging significantly. This shows that against the backdrop of weak demand and strong costs in the steel industry suppressing corporate profits, the market has high expectations for this round of policies to accelerate the optimization of the industry's capacity structure. This round of "combating the 'rat race' competition" is expected to accelerate the optimization of supply and demand in the steel industry, with the key to breaking the "rat race" lying in short-term production restrictions and long-term capacity reduction. Meanwhile, the product structure of steel companies should also further upgrade towards high-end to align with manufacturing upgrades, avoiding homogeneous competition.