China’s Baowu to relocate Meigang to coastal Jiangsu
The plan involves a wholly owned Baowu subsidiary named Shanghai Meishan Iron & Steel, a diversified maker of flat rolled steel including automotive sheet and tinplate and boasting over 7 million t/y capacity at its existing works in Nanjing, southwest of Shanghai.
According to Baoshan Steel’s filing, Baowu recently signed a framework agreement with the Jiangsu provincial government, the government of Nanjing city (Jiangsu’s capital) and the Yancheng city government to relocate Meishan Steel from Nanjing to Yancheng- by 2028.
The statement said that Baowu Group plans to invest Yuan 50 billion ($7.2 billion) for the first phase project which would have a designed capacity of 8-10 million t/y – larger than Meishan Steel’s existing capacity – and that a port and coke-making plants would also be constructed.
Capacity remains the key, however, because Baowu said it may purchase the external capacity ‘quotas’ to expand the plant’s capacity to 20 million t/y. “But this will be dependent upon Baowu acquiring capacity quotas from mills in other provinces because Jiangsu aims to cut capacity to below 115 million t/y by 2020,” an analyst from Changjiang Securities said.
China’s central government bans steelmakers from installing new capacity without scrapping facilities of similar or greater capacity, as Mysteel has reported. Jiangsu currently hosts over 50 steelmakers with around 121 million t/y steel capacity, Mysteel notes.
The province has pledged to upgrade and transform the local steel industry and thus meet its target of eliminating 17.5 million tonnes/year of iron and steelmaking capacity during 2016-2020.
A total of 12.1 million t/y of steel capacity was already removed during 2016-2017, Mysteel calculates based on data from the Jiangsu Provincial Statistics Bureau, so the province needs to scrap the equivalent of 5.4 million tonnes/year within the next two years to achieve its goal, as reported.
Baowu has applied to the Jiangsu provincial government for approval for its project but a company official was confident preliminary construction would start next year and that the first stage would be commissioned within three years. She also said that Meishan would continue to produce as normal at Nanjing “until the new steelworks is put into operation.”
The Changjiang Securities analyst described Baowu’s move as being “policy-oriented”, suggesting that Baowu, as China’s largest steelmaker, would be showing leadership and helping to develop new steel works in coastal areas producing high quality steel.
Many Chinese city and provincial governments are promoting the relocation of steel works away from urban centres to reduce atmospheric pollution, Mysteel notes. It was this policy which last week saw Baosteel Desheng Stainless Steel Co, also part of the Baowu Group, hold a ground-breaking ceremony on a stainless works expansion at Luoyuan, a coastal city in East China’s Fujian province, as reported.
Baowu Group, headquartered in East China’s Shanghai and the world’s second largest steel enterprise after ArcelorMittal, aims to expand its steel capacity to 100 million tonnes/year by 2021 with high-end steel products as the core, as reported.
Written by Thea Feng, fengyx@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
JFE Shoji acquires U.S steel frame manufacturer
Aug 22, 2022 13:30
Japanese carbon steel flats prices rise slowly
May 30, 2022 14:45
Baoshan Steel cuts HRC list prices by $15/t for June sales
May 11, 2022 12:30
Nippon Steel again lifts flat prices by $156/t for May
Apr 22, 2022 13:30
Tokyo Steel lifts May prices by $24/t on rising costs
Apr 18, 2022 14:00