Baosteel's H1 net profit down 36.87% y/y
Net profit recovered in Q2 from the first quarter
Earnings drop due to the coronavirus, iron ore prices
Adds details from Baosteelearnings conference callon Friday
BEIJING, Aug 27 (Reuters) - Baoshan Iron & Steel Co Ltd 600019.SS, China's top listed steel producer, said on Thursday net profit slumped 36.87% in the first six months of 2020, pressured by the coronavirus pandemic and climbing raw material prices.
However, the company, known as Baosteel, expects demand for cold-rolled steel products to support second-half performance.
"Our cold-rolled sheets orders are good in the third quarter," it said in anearnings callon Friday, adding that iron ore prices are expected to fall in the fourth quarter but remain higher on average compared with last year.
The company reported net profit of 4.0 billion yuan ($581.45 million) for the first half, down from 6.34 billion a year earlier, in a filing to the Shanghai Stock Exchange. Its first-half revenue fell 7.9% to 129.8 billion yuan.
"Due to impact from the coronavirus, downstream demand for steel plunged in the first quarter ... (while) iron ore prices fluctuated within high range," the company said in a statement, adding that the steel sector recovered gradually in the second quarter though imported ore prices continued to dent profits.
For the period from April to June, Baosteel earned 2.47 billion yuan, Reuters calculations showed.
That was a jump of 60.6% from the first quarter, but still well below net profit of 3.46 billion yuan in the year-earlier period.
China's benchmark iron ore futures prices DCIOcv1 have surged more than 60% this year on supply-side disruptions from the pandemic, as well as resilient demand amid Beijing's stimulus measures to shore up a slowing economy.
Most listed steel firms reported big drops in net profit for the first half, with some down more than 40% on an annual basis.
In the first six months, Baosteel produced 22.43 million tonnes of steel products, down from 24.3 million in year-earlier period.
Baosteel is building a blast furnace in Zhanjiang in the southern province of Guangdong, which will bring new molten iron output to about 2 million tonnes in 2021.
($1=6.8794 Chinese yuan renminbi)
(Reporting by Min Zhang and Tom Daly; Editing by Kim Coghill and Clarence Fernandez)
((min.zhang@thomsonreuters.com; (8610) 5669-2105;))
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