Baosteel Takes a Beating Thanks to Low Steel and Iron Ore Prices

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Baoshan Iron & Steel (Baosteel), China’s biggest listed steelmaker by stock market value, posted a 14.8 percent fall in first-half net profit, reflecting weak prices and slackening demand growth, the company said on Friday.

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Net profit dropped to 3.15 billion yuan ($512.1 million) from 3.7 billion in the same period last year, the company said in a filing to the Shanghai stock exchange. It did not provide profit figures for the April-June quarter.

China’s steel sector is facing its biggest challenges since the global financial crisis of 2008, as mills deal with heavy debt loads, chronic oversupply and mounting environmental protection costs.

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Chinese steel prices were flat for the day. The price of iron ore 58% fines from India hit a high price of CNY 840.00 ($136.81) and a low price of CNY 830.00 ($135.18) per dry metric ton. The price of Chinese HRC continues hovering around CNY 3,380 ($550.51) per metric ton for the fifth day in a row. The price of Chinese coking coal saw essentially no change for the fifth day in a row, remaining around CNY 1,390 ($226.39) per metric ton.

For the fifth consecutive day, the steel billet cash price held flat on the LME at $420.00 per metric ton. The steel billet 3-month price was unchanged on the LME at $425.00 per metric ton.

The US HRC futures contract 3-month price remained essentially flat at $645.00 per short ton. The spot price of the US HRC futures contract saw little movement at $675.00 per short ton.

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