Baosteel moving 30% of capacity out of Shanghai

Baosteel has decided to move 30% of its steelmaking capacity out of Shanghai over the next five years to improve its competitive edge and focus on high-end products.

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The steelmaker has signed an agreement with Shanghai’s government for the restructure on Wednesday, an announcement on its website said. The move is in line with the city’s shift from being a manufacturing hub to a financial one.

After the move, Baosteel’s iron and steelmaking capacity in Shanghai will be reduced by 5.8 million tpy and 6.6 million tpy respectively. This is the equivalent of 3 million tonnes of coal consumption.

“The parts which will be moved from Shanghai include capacities of stainless steel, special steel and COREX iron-making facility,” one official with the steelmaker said.

Baosteel also took environmental protection into account in coming to the decision, he added.

The steelmaker will move part of its operations to China’s southern Guangdong province and northwest Xinjiang province where it has steel production bases.

Its stainless steel arm will be relocated to Zhejiang province’s Ningbo city, a source at Baosteel Stainless confirmed without providing further details.

“We will move our facilities there instead of purchasing new facilities,” a second source at Baosteel Stainless said.

The stainless steelmaker’s current capacity in Shanghai is 1.44 million tpy. Its cold rolling plant in Ningbo city will be able to produce 600,000 tpy of cold rolled products.

Baosteel also has a controlling stake in a 200-series mill in Fujian province named Baosteel Desheng Nickel, a 2 million tpy facility.

Ningbo Port, one of the busiest in China, will be a boon for Baosteel but the city is said to often suffer from power shortages.

Baosteel’s Shanghai base will focus on carbon steel. It will enhance its research and production of high-end products for making home appliances, motor vehicles and ships.

The steelmaker will also diversify its business by going into the materials industry.

For example, Baosteel has set up the first mineral wool company in China, which uses cast-offs from blast furnaces to produce fireproofing thermal-protection material.