Shanxi Coking Coal Energy Group Co., Ltd. (SHE: 000983) experienced a slump in net profit during the first half of 2023, according to its half-year report.
The company reported net profit attributable to shareholders totaled 4.52 billion yuan ($627.27 million) over the period, marking a 29.43% drop compared with H1 2022. Furthermore, the net profit excluding non-recurring gains/losses registered 4.55 billion, down 19.85% year on year. The basic earnings per share were calculated at 0.8425 yuan.
Its revenue amounted to 27.56 billion yuan during the reporting period, down 15.7% year on year, the report showed.
The report did not offer a specific explanation for the profit decline, but industry experts widely attributed the slide in profitability to a downturn in the steel sector. This challenging landscape has hampered the demand for coking coal, leading to a reduction in the company's sales revenue.
A case in point goes with Shanxi Coking Coal's subsidiary, Jinxing Energy, whose net profit experienced a substantial 46.14% drop to 1.8 billion yuan over the period. This decrease was largely influenced by the decline in coal prices.
China's spot coking coal prices have declined substantially since the beginning of this year. As of August 9, the prices for Shanxi-produced premium coking coal stood at 2,150 yuan/t at Jingtang port, ex-stock with VAT, Sxcoal data showed. This figure has already declined 21.25% from this year's peak of 2,730 yuan/t.
Similarly, the prices of Quasi-grade I coke at Rizhao and Tianjin ports were 2,080 yuan/t (FOB with VAT) on the same day, compared with the peak of 4,020 yuan/t in 2022.
The futures market showed a similar trajectory. Throughout the first half of this year, coking coal benchmark exhibited a downward trend, plummeting from a high of 2,049.50 yuan/t on February 24 to a low of 1,263 yuan/t on May 26, followed by a gradual recovery. The coke futures also fell nearly 25% from the yearly peak of 2,967.5 yuan/t on March 3 to the current 2,231 yuan/t.
(Writing by Alex Guo Editing by Rebecca Liu)
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