China-based Baosteel Group’s steel production is expected to reduce by 5pc or 1mn mt in the first quarter (Q1) compared to a year ago due to the impact of coronavirus (Covid-19). Baosteel’s production and sales are expected to reduce by 8pc as compared to the original forecast, according to the China Iron and Steel Association (CISA).
Baosteel expects Q1 profits to decline by CNY2-3bn from a year ago as the coronavirus outbreak has impacted steel prices and input costs, besides other factors.
Production at four major bases of Baosteel, namely, Baoshan, Meishan, Qingshang and Zhanjiang are running normally. Wuhan Iron and Steel base is shut due to government directives. Most of Baosteel’s 546 subsidiaries have resumed work. Fifty-two subsidiaries are still shut and resumption at 42 of among them are delayed by the local government. Due to the impact on logistics, inventory of some raw materials is tight and few finished products are being shipped out normally.
Transportation ban has held up shipments from Baosteel’s manufacturing plant in Hubei. Shipment from Wuhan Iron and Steel company is severely hindered and 400,000mt of finished steel products is stored at this facility, an increase of 230,000mt from Dec 2019. Baosteel’s Echeng Steel plant in Hubei province has 760,00mt inventory, which is up by 125pc from normal inventory levels.
Baosteel produces around 98.5-102mn mt crude steel per year.