China Steel Turns Profitable in First Seven Months with Pre-Tax Net Profit of NT$2.99 Billion

China Steel Corporation today (20th) released its consolidated income statement for July 2024. Driven by higher steel product sales volume, the company’s cumulative consolidated operating revenue for the first seven months of the year reached NT$197.722 billion, an increase of NT$5.064 billion (approximately 2.6% year-on-year) compared to NT$192.658 billion during the same period last year. Consolidated operating profit stood at NT$3.287 billion, a significant improvement of NT$5.553 billion from the NT$2.266 billion operating loss recorded in the prior-year period. Consolidated pre-tax net profit was NT$2.994 billion, turning profitable from a pre-tax loss of NT$2.408 billion in the same period last year—an improvement of NT$5.402 billion.

Looking solely at July, China Steel’s consolidated operating revenue was NT$29.72 billion, up NT$1.726 billion (6%) from NT$27.994 billion in June. However, consolidated operating profit decreased to NT$241 million from NT$1.519 billion in June, a reduction of NT$1.278 billion. Consolidated pre-tax net profit also declined to NT$655 million from NT$1.466 billion the previous month, down by NT$811 million.

China Steel stated that the decline in pre-tax net profit in July compared to June was primarily due to lower unit gross margins in the steel business, which reduced operating profit. Nevertheless, increased dividend income partially offset non-operating losses, allowing the company to maintain profitability for the month.

Revenue reaches NT$197.7 billion, up 2.6% annually; steel sales exceed 4.44 million metric tons

Regarding steel sales, China Steel’s individual sales volume in July reached 704,489 metric tons. The cumulative steel sales volume for the first seven months of the year totaled 4,449,017 metric tons. The company noted that the significant year-on-year improvement in cumulative pre-tax profit was mainly driven by increased sales volume leading to higher operating profits. On the other hand, lower interest and dividend income resulted in less favorable non-operating earnings compared to the same period last year.

On the outlook for the steel market, China Steel indicated that while the U.S. economy continues moderate growth, Europe’s energy costs continue to suppress manufacturing demand. Mainland China faces ongoing challenges including a sluggish property market and industrial restructuring. Taiwan’s economy, however, is being driven by strong demand from the AI industry. The Directorate General of Budget, Accounting and Statistics recently revised this year’s GDP growth forecast upward to 11.05%, and the resulting spillover effects are expected to boost other industries and end-consumer momentum.

In the international steel market, recurring conflicts in the Middle East have heightened market uncertainty, and crude oil prices remain volatile. Steelmaking costs remain at high levels. China Steel analyzed that steel prices in the U.S. and Europe are supported by trade barriers and remain relatively high. In contrast, the Asian steel market remains relatively weak, but production cuts by Chinese steel mills are helping to tighten supply and improve industry profitability. Additionally, the rate of price decline in Vietnam has gradually narrowed, signaling early signs of market bottoming.

China Steel further stated that as downstream inventory in Taiwan gradually adjusts and depletes, and with supply-side improvements expected across Asia, the momentum for the steel market is likely to stabilize progressively. The company will continue to closely monitor global economic conditions, international steel prices, raw material costs, and changes in downstream demand, flexibly adjusting its production and sales strategies to maintain stable operations and market competitiveness.