It is reported that the Baosteel Group will reduce about 30% of its steelmaking capacity in Shanghai over the next five years as part of a strategy to help the city adjust the growth model and to expand into the west.

Mr Xu Lejiang BaoSteel chairman said the company will move 5.8 million tons of iron production capacity and 6.6 million tons of steel output capacity to plants in Guangdong province and the Xinjiang Uygur Autonomous Region by 2017. Its annual output in the city totals about 22.25 million tons.

Mr Xu called the move a proactive adjustment that will benefit the nation steel industry strategy, the city growth and the company own competitiveness. Shanghai based BaoSteel and the city signed a deal yesterday for the move.

The plan followed a similar move by the Shougang Corp, the only Beijing based steel maker which moved its main factory to nearby Hebei Province ahead of the 2008 Olympic Games to help reduce pollution.

The profit margin in China steel industry has been squeezed by high raw material costs and slowing demand. The government has been phasing out old, obsolete capacity.

Upon completion of the capacity reduction plan, high-end steel used in automobiles, home appliances and shipbuilding which represents higher added value will have a larger portion of BaoSteel local operations mainly in Baoshan District.

BaoSteel started building a 10 million-ton-a-year steel plant in the port city of Zhanjiang in Guangdong on May 31 after getting approval from the National Development and Reform Commission.

Source - Shanghai Daily

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