Hunan Valin Steel Co., Ltd. outlined its first-half 2026 operating results, raw material procurement strategy and demand outlook for the second half at an investor relations event on Aug 24.

The company posted total operating revenue of 61.20 billion yuan ($9 billion) in January-July, with total profit, net profit and net profit attributable to shareholders of 842 million yuan, 571 million yuan and 225 million yuan, respectively.

Excluding the impact of a tax adjustment, second-quarter profit reached 1.09 billion yuan, up 128% quarter on quarter, while net profit attributable to shareholders rose 228% quarter on quarter to 649 million yuan.

According to its interim report, operating revenue fell 2.99% year on year in the first half year, while net profit attributable to shareholders dropped 87.11% year on year.

Valin Steel attributed the decline to persistent supply-demand imbalances in the industry, high raw material price volatility and falling steel prices that squeezed profit margins.

First-quarter blast furnace maintenance at subsidiaries and weak demand and steel prices in the Hunan region also weighed on earnings, according to what it said in the investor relations activity.

The company said it will continue advancing its "high-end, green, intelligent, lean and international" development strategy, focusing on work safety, high-end innovation, transformation and upgrading, cost reduction and efficiency improvement, as the company moves to build itself into a world-class steelmaker.

On production and sales, Valin Steel said second-quarter operations improved from the first quarter after excluding tax impacts. Short-term adverse factors such as blast furnace maintenance and technical-economic indicator fluctuations were resolved in the second quarter, with multiple production lines setting monthly output records and monthly hot metal costs remaining below the industry average.

The company developed over 80 new products in the second quarter, with several achieving first deliveries. In addition, downstream demand (such as the automotive sector) also improved quarter on quarter.

Looking ahead to the second half of the year, the company said supply-demand competition in the industry continues, with steelmakers facing significant operational uncertainty. At present, raw material prices remain elevated and volatile, keeping pressure on steelmakers' costs.

On the demand side, July marks the traditional off-season for steel consumption, with weak overall demand from sectors like automotive and home appliances. The anticipated "golden September and silver October" period is expected to drive marginal improvement in downstream demand. Shipbuilding and pressure vessel sectors maintain high prosperity, while construction machinery orders improved year on year, though hot-rolled coil base prices remain weak due to property and infrastructure drag.

On exports, Valin Steel said it actively seized overseas market opportunities and increased high-end steel product exports, shipping 764,200 tonnes in the first half, up 22% year on year.

However, Middle East geopolitical conflicts and rising logistics costs in the first half significantly increased warehousing and transportation expenses for some overseas orders, making order profitability weaker than expected. The company said export profitability could recover if Middle East tensions ease and overseas logistics and customs conditions improve.

Responding to investor questions on raw material procurement amid rising coking coal prices, Valin Steel said it maintains lean production and low inventory strategies, procuring coking coal and other raw fuels based on actual production needs.

The company is broadening procurement channels, optimizing diversified coal blending and ore proportioning structures, and promoting substitution of high-priced resources to stabilize production and business efficiency.

At the same time, the company continues to optimize port layouts and ocean freight COA chartering, developing new water transport channels to increase the proportion of water transport.

Structural adjustments and logistics optimization reduced ore and metallurgical coal procurement costs by approximately 100 million yuan in the first half, said Valin Steel.