On the evening of April 29th, Shandong Iron and Steel released its 2024 annual report and the first quarter report of 2025. In 2024, the steel industry faced the challenge of deep adjustment. Shandong Iron and Steel actively transformed to survive. In the first quarter of 2025, the company's operating performance improved significantly, achieving operating revenue of 19.255 billion yuan, net profit of 108 million yuan, and a substantial reduction in net loss attributable to the parent company, with the loss narrowing to 14.4148 million yuan. Among the 27 listed steel companies, the company's net profit attributable to the parent company has risen by 6 places compared to the fourth quarter of 2024, and its net cash flow from operating activities has jumped to the third place, a significant increase of 22 places compared to the fourth quarter of 2024. The company's business situation continues to improve, demonstrating stronger competitiveness in the steel industry's elimination competition.

The results of survival through change have emerged

Against the backdrop of a profound industry adjustment, Shandong Iron and Steel, relying on the "two participations" model of China Baowu's participation in Shandong Iron and Steel Group and Baosteel's participation in Shandong Iron and Steel Rizhao, has comprehensively advanced the "1+6+N" transformation system. Focusing on the management theme of "survival through transformation", it has firmly established the concept of value creation, comprehensively benchmarked and identified gaps, maximally enhanced efficiency, deepened collaborative support, and strengthened cost reduction and efficiency improvement. It has laid a solid foundation for the medium and long-term sustainable development of the company.

This series of measures were successively implemented in 2024 and gradually showed their effects, driving the company to achieve a total profit of 154 million yuan in the first quarter of 2025, with a net loss attributable to the parent company of 14.4148 million yuan, a significant reduction in losses compared with the same period of the previous year.

In the first quarter, the company optimized its production organization and created an efficient manufacturing model. As a result, the efficiency of production lines and interfaces significantly improved, and key indicators such as the comprehensive temperature drop of molten iron and the hot loading rate of the rolling line steadily increased.

Meanwhile, the company has established a three-level cost control system of "company - factory department - workshop", systematically promoting measures such as process cost reduction, contract fee reduction, reduction and substitution of external projects, energy optimization and procurement cost reduction, significantly reducing process costs and cash payment expenses. The cost of pig iron per ton of steel at the Rizhao base and Gangcheng base has reached the advanced level in the industry. The indicators such as the temperature drop of ironware, the rate of defective products, and the contract completion rate have all reached the best levels in history.

In addition, through precise market tracking and product structure optimization, the company closely follows the proportion of key products, actively seizes high-quality and efficient orders, and effectively controls the pace and extent of product price decline. In the first quarter of 2025, the company's steel output was 4.041 million tons, an increase of 5.74% year-on-year. Steel sales reached 4.0544 million tons, increasing by 1.76% year-on-year. Meanwhile, the procurement end fully utilized the opportunity of the decline in raw material prices, strengthened negotiations and communication with suppliers, accurately grasped the procurement timing, significantly reduced procurement costs, and the purchase and sale price difference increased by more than 200 yuan per ton compared with the same period of the previous year.

The industry ranking has moved up significantly

The profits of the steel industry remained at a relatively low level in the first quarter. From the perspective of supply and demand, data from the National Bureau of Statistics shows that in the first quarter, China's crude steel output reached 259.33 million tons, increasing by 0.6% year-on-year. The apparent consumption of crude steel reached 230.16 million tons, a year-on-year decrease of 1.3%. During the same period, China exported 27.43 million tons of steel, increasing by 6.3% year-on-year. Imported steel was 1.55 million tons, a year-on-year decrease of 11.3%. In terms of price, in the first quarter, the price of steel in China showed a sideways trend. Entering April, due to the disturbance of the US tariff policy, the price of steel in China dropped significantly. From the perspective of raw materials, in the first quarter, China's mineral prices remained firm while coal prices declined. Entering 2025, the price of iron ore will still fluctuate at a high level, mostly around 100 US dollars per ton. Meanwhile, the supply pattern of coking coal is relatively loose, with prices falling and stabilizing recently.

From the perspective of the 27 major listed steel companies, the profits of the entire steel industry in the first quarter of this year have improved significantly compared with those in the fourth quarter of last year. Among them, Shandong Iron and Steel's net profit attributable to shareholders in the first quarter rose by 6 places compared with the fourth quarter, achieving an upward trend in production and operation performance against the odds. From the perspective of net operating cash flow, the company attaches great importance to the management of cash flow, and its net operating cash flow is at a relatively high level. In the first quarter of 2025, it rose to the third place, and its ability to continue operating is at a relatively high level.

Citic Securities stated that it expects 2025 to be a turning point year for China's steel industry. The first quarter of 2025 is expected to become a long-term performance turning point for the steel industry. With the deepening of industry reform, the continuous reduction of production capacity and output will be inevitable. The supply side is expected to bring about an unexpected contraction in production. At the same time, as the steel industry continues to promote integration and reorganization and the exit of backward and inefficient production capacity, it is expected that the profits of the industrial chain will continue to be redistributed, and the steel industry will benefit from this redistribution.