The Shanghai-based iron and steel manufacturer Baosteel began trial operations at its Zhanjiang steel factory in Guangdong province last week, despite a chronic oversupply in the global steel industry that has also forced the closure of the SSI plant at Redcar in the north-east of England. The Zhanziang factory is located on Donghai Island, just over 400 kilometres down the coast of the South China Sea from Hong Kong, consists of two blast furnaces, pier berths and other production and auxiliary facilities. Upon its completion in September next year, it is expected to be able to produce 8.75 million tons of crude steel a year.
The timing is not ideal as China’s steel industry is being squeezed by oversupply and low profits. During the first six months of the year, 26 out of the 55 listed steel companies reported a loss, with the total losses amounting to 10.69 billion yuan (US$1.68bn), according to Wang Guoqing, director with Lange Steel Research Center.
“Although the project is facing a sluggish market, its advanced technology and equipment will give Baosteel more competitiveness in terms of lower emissions and energy consumption, high efficiency,” said Zhang Tieshan, a senior analyst with industry information site Mysteel.com. “Compared to the Shanghai plant, the Zhanjiang project is closer to raw material supplies from Brazil and Australia, and is also more adjacent to its target market in Guangdong province and Southeast Asian countries.”
In the UK, meanwhile, the Thai-owned SSI announced that it was to mothball its iron and steelmaking plant on Teeside with the loss of 1,700 jobs.