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China Baosteel’s Q3 net profit plunges on faltering steel prices

Baosteel made a net profit of $188 million, down from 3.8 billion yuan in the year-ago period.

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China’s biggest listed steelmaker, Baoshan Iron & Steel, reported a nearly 65% plunge in its third-quarter net profit, undermined by a fall in steel prices. The company, known as Baosteel, said in a filing to the Shanghai Stock Exchange that it made net profit of $188 million, down from 3.8 billion yuan in the year-ago period. Baosteel is a subsidiary of state-owned China Baowu Steel Group, the world’s largest steelmaker by output.
Net profit over the first nine months of the year fell 29.56% from the same period a year before to 5.88 billion yuan, it said. Disappointing demand for steel amid a persistent property downturn and weaker-than-expected consumption from the infrastructure sector had hammered steel prices in the third quarter, squeezing steelmakers’ profit margins, analysts said. In the first nine months of the year, the average price of imported iron ore dipped 0.8% while steel prices slid 7.67%, the state-backed China Iron and Steel Association said last week.
Losses among Chinese steelmakers totalled 34.1 billion yuan from January to September, official data showed. Demand, however, showed signs of stabilising after a raft of stimulus measures unveiled in late September boosted sentiment, Baosteel said. Baosteel produced 12.56 million metric tons of pig iron and 13.3 million tons of steel in the July-September quarter, bringing the total in the first nine months of the year to 36.68 million tons and 39.61 million tons, respectively.
Export orders were 4.66 million tons in the first three quarters, it said. China made 768.48 million tons of crude steel in the first nine months of this year, down 3.6% year-on-year, official data showed.

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JSW Group and POSCO to Establish Greenfield Steel Plant in Keonjhar

Joint venture aims for 5 MTPA capacity on EV battery materials.

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Odisha Chief Minister Mohan Charan Majhi announced that JSW Group, in collaboration with South Korean steel giant POSCO, will set up a greenfield steel facility in his home district of Keonjhar. This development follows speculation regarding the location of the joint venture.

During his two-day visit to Keonjhar to celebrate Diwali, Majhi disclosed that discussions about the steel plant took place during roadshows for the upcoming Make-in-Odisha conclave held in Delhi and Mumbai. He confirmed that the two companies have signed a Memorandum of Understanding (MoU) to establish the plant, which will be situated in the mineral-rich Keonjhar district.

The MoU was signed on October 29 at JSW Group’s corporate headquarters in Mumbai, with prominent figures such as JSW Group Chairman Sajjan Jindal and POSCO Chairman Chang In-hwa in attendance. The planned integrated steel plant will have an initial capacity of 5 million tonnes per annum (MTPA).

Additionally, the partnership will explore collaborations in battery materials for electric vehicles (EVs) and renewable energy to meet the captive needs of the proposed facility. The Odisha government has earmarked two land parcels in Keonjhar for this purpose: one spanning 2,500 acres near Odisha Tea Plantation Ltd in the Taramakant area under the Banspal block, and another 1,956-acre site in Patna, which was initially offered to steel major ArcelorMittal.

This venture marks a renewed effort by POSCO to establish a presence in Odisha after its earlier attempt to set up a 12 million tonnes steel mill in Paradip was abandoned due to protests and regulatory challenges.

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AM/NS India to Launch Steel Project in Andhra

Major steel project set for Andhra Pradesh

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ArcelorMittal Nippon Steel (AM/NS) India is moving forward with a significant steel project in Andhra Pradesh, entailing an investment of ?1.4 lakh crore. This massive project aims to establish a steel manufacturing capacity of 17.8 million tonnes per annum (MTPA), with operations expected to boost both state and national steel output. The facility will incorporate advanced, sustainable technologies and contribute significantly to India’s target of self-sufficiency in steel production. The venture includes environmental compliance measures and strategic partnerships with local stakeholders to promote economic growth and job creation in the region. The Andhra Pradesh government has welcomed the investment, highlighting its potential to generate thousands of direct and indirect jobs. AM/NS India’s investment underscores its commitment to expanding its footprint in India and aligning with national goals to elevate the country as a global steel production hub. The project’s development is expected to attract further infrastructure investment and strengthen the state’s industrial base.

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Steel Sector Faces ?89,000 Crore Challenge

Rising imports strain steel companies’ resources.

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The Indian steel industry is currently grappling with a significant challenge, with companies facing ?89,000 crore worth of unsold stock due to rising imports. This situation has escalated as increased foreign steel supplies, coupled with fluctuating domestic demand, have intensified market competition. The influx of cheaper imports is impacting local producers’ ability to maintain price stability and profitability.

Industry leaders are concerned that the current market dynamics, driven by a demand-supply gap, are causing considerable financial strain on steel companies. The increasing volume of imports, especially from countries with lower production costs, is eroding the market share of domestic producers, making it difficult for them to compete effectively.

The situation is further complicated by price volatility, which affects production costs and the overall economic viability of steel operations. Companies are seeking intervention from the government to implement safeguard measures that would help protect the domestic industry from unfair competition and ensure a level playing field.

Analysts indicate that without prompt action, including potential tariffs or import restrictions, the steel sector may face severe consequences, including production cuts and layoffs, as companies struggle to clear their stock and maintain operational continuity.

The manufacturing sector relies heavily on steel, making this issue critical not only for steel producers but also for broader industrial growth. The government’s role in facilitating fair trade practices and supporting local businesses will be vital in addressing these challenges and ensuring the sustainability of the steel industry.

In conclusion, the steel companies are at a crossroads, with significant implications for the economy. Addressing the challenges posed by rising imports will require coordinated efforts between the industry and the government to foster a more resilient and competitive domestic steel sector.

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