Baoshan Iron&Steel Co. Ltd. And Bao-Trans Enterprises Ltd.

Overview Key strengths Key risks Leading position in China's steel industry with dominant market share in high value-added steel products. Exposure to the cyclical steel industry. Competitive cost structure to mitigate volatile raw materials prices. Lack of overseas presence. Financial leverage to remain low owing to strong operating cash flow. Benefit from decarbonization and concentration of steel industry in China Core subsidiary of central-government-owned China Baowu Steel Group Corp. Ltd. (Baowu). We forecast total sales volume of Baoshan will increase to 49 million-50 million tons by the end of 2023, from our estimate of 46 million tons in 2021 based on our expectation the company's No. 3 blast furnace in Zhanjiang base will be onstream in 2022. Although its commencement

...Baoshan Iron & Steel Co. Ltd. (Baoshan) will maintain its large operating scale and leading market share in high-end products over the next two years. We forecast total sales volume of Baoshan will increase to 49 million-50 million tons by the end of 2023, from our estimate of 46 million tons in 2021 based on our expectation the company's No. 3 blast furnace in Zhanjiang base will be onstream in 2022. Although its commencement of operation was delayed from the original plan of mid-2021, mainly to be in step with the government's mandate to curb crude steel output this year, the No. 3 blast furnace in Zhanjiang means additional crude steel capacity of 3 million-4 million tons per annum (mtpa) for Baoshan once it is fully ramped up in 2023. Baoshan has maintained over 50% market share in the high-end auto plate market during the past few years. The sales volume of its cold-rolled auto plate product will continue to account for 18%-20% of the company's total sales volume and over 40% of its...

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