① Baotou Steel achieved a year-on-year turnround in the third quarter, but rare earth prices fell sharply in the third quarter, and the company's Q3 single-quarter performance declined month-on-quarter as the operating environment in the steel industry improved in the third quarter. ② as of the third quarter, the company's total output of steel exceeded 10.7976 million tons, rare earth concentrate production of 251800 tons, fluorite production of 338100 tons.
* Financial Associated Press, October 28 (Reporter Zhang Liangde)There is great downward pressure on the iron and steel industry market this year. Supported by rare earth profits, Baotou Iron and Steel Co., Ltd. (600010.SH) achieved a year-on-year turnround in the first three quarters, but due to a sharp drop in rare earth prices in the third quarter, the company's Q3 single-quarter performance still showed a month-on-quarter decline despite an improvement in the operating environment in the steel industry in the third quarter.
According to the third quarterly report released by Baotou Steel shares tonight, the company's operating income in the third quarter was 53.582 billion yuan, down 7.94 percent from the same period last year. The company's net profit returned to its parent was 475 million yuan, turning losses into profits over the same period last year, but Q3's profit in a single quarter was only 61.7878 million yuan, down nearly 50 percent from the previous quarter.
The company's steel sales structure changed to a certain extent in the third quarter. The company's plate and wire bar production and sales increased significantly compared with the same period last year. Plate sales rose from 6.7189 million tons to 6.9299 million tons, and wire bar sales rose from 1.3209 million tons to 1.4252 million tons. However, the sales volume of profiles and tubes did not change much from the same period last year.
The decline in the company's profits in the third quarter was mainly due to a sharp drop in the price of rare earth concentrate, the pillar of the company's profits. According to the company announcement, the related transaction price of rare earth concentrate was 20176 yuan per ton excluding tax in the third quarter of 2023, down about 35 percent from 31030 yuan per ton in the second quarter.
It is expected that the profits contributed by rare earth concentrates to the company will not increase significantly in the fourth quarter. According to the price index of China rare Earth Industry Association, domestic rare earth prices as a whole were at a low level in the second and third quarters, and the current prices rebounded somewhat in the fourth quarter, but by a limited extent. According to the company announcement, the related transaction price of rare earth concentrate in the fourth quarter of 2023 is 20536 yuan / ton, excluding tax, and the price has increased by only 360 yuan / ton.
According to the company's historical announcement and data from a research institution, the production cost of rare earth concentrate in 2017-2018 is about 7800 yuan / ton, and then the production cost has increased, but the related party transaction prices can still remain highly profitable in the third and fourth quarters.
Rare earth price trend chart (photo source: China rare Earth Industry Association)
According to Baotou Steel's 2023 business plan, the company's main goal this year is to produce 14.77 million tons of iron, 16 million tons of steel, 15.14 million tons of commodity billets, 320000 tons of rare earth concentrate and 500000 tons of fluorite, with a revenue of 85.9 billion yuan.
As of the third quarter, the company's total output of steel exceeded 10.7976 million tons, rare earth concentrate output of 251800 tons, fluorite production of 338100 tons. According to the rough calculation of production and sales data in the third quarter, the company's rare earth concentrate production and sales are expected to meet the annual plan, but steel and fluorite production and sales may be slightly less than expected.
In the first three quarters, the company's cost-side operating costs were 48.117 billion yuan, down 12.14% from the same period last year, while expenses and other costs were 4.585 billion yuan, an increase of 10.05% over the same period last year. The higher cost also encroaches on some of the company's profits, but it is worth noting that there is a large increase in R & D expenses in the expense project, or due to the company's increased investment in product upgrading and transformation, while management expenses and interest expenses have decreased slightly.