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Published weekly by Platts, the steel industry’s quality news service

08 February (Issue 06-12) 2012

Top News

US coil buyers shun import offers

European hotrolled coil was offered at $640670/s.t ($705739/t) cfr Gulf of Mexico last week, well below domestic spot prices of $730750/s.t. However, the import offers were deemed uncompetitive as they would not be delivered until May or June. "It was cheap enough to warrant interest, but the leadtimes are too great," one buyer says of

Domestic HRC lead times have

shortened since the start of the year to around 5.5 weeks, SBB notes. "This is obviously a sign that orders are not as strong as one would hope, but I think that it is possible that this could simply further the issue that import lead times are too far out," a southern US broker says. Domestic spot



import offers. "You can be $100 below prices have remained level after a rapid domestic, but if the leadtime doesn't increase in prices lost steam in January.

Chinese rebar capped by weak demand

Chinese rebar capped by weak demand Beijing spot rebar prices were down slightly last week (

Beijing spot rebar prices were down slightly last week (see page 4) after demand remained weak at the end of the lunar new year holidays. “We are waiting to see if enduser demand will improve this week when the market is fully opened after the Lantern Festival [6 February],” says a Shanghaibased source. However, “continuous new deliveries from mills are pushing up market inventories. As such, traders were driven to lower prices to accelerate sales,” one trader points out.

lower prices to accelerate sales,” one trader points out. Editor’s Comment CSN buys German sections mill
lower prices to accelerate sales,” one trader points out. Editor’s Comment CSN buys German sections mill
lower prices to accelerate sales,” one trader points out. Editor’s Comment CSN buys German sections mill

Editor’s Comment

sales,” one trader points out. Editor’s Comment CSN buys German sections mill Brazilian steelmaker,

CSN buys German sections mill

CSN buys German sections mill Brazilian steelmaker, CSN, has bought German 1.1m t/y EAF meltshop and
CSN buys German sections mill Brazilian steelmaker, CSN, has bought German 1.1m t/y EAF meltshop and
CSN buys German sections mill Brazilian steelmaker, CSN, has bought German 1.1m t/y EAF meltshop and

Brazilian steelmaker, CSN, has bought German 1.1m t/y EAF meltshop and sections mill, Stahlwerke Thüringen, from Spain’s Alfonso Gallardo Group for €482.5m ($640m). The financially troubled Spanish group had been in talks with CSN over a possible sale of Thüringen and several other plants last year before CSN pulled out. The acquisition makes CSN the first Brazilian steelmaker to own steelmaking and rolling operations in Germany.

pulled out. The acquisition makes CSN the first Brazilian steelmaker to own steelmaking and rolling operations
pulled out. The acquisition makes CSN the first Brazilian steelmaker to own steelmaking and rolling operations
pulled out. The acquisition makes CSN the first Brazilian steelmaker to own steelmaking and rolling operations
SBB World Steel Price Tracker 08 Feb 12 = 251 Jan 2000 = 100 Source:
SBB World Steel Price Tracker
08 Feb 12 = 251
Jan 2000 = 100
Source: SBB Price Trackers

Late News

 ArcelorMittal posts $2.3bn profit in 2011

 East Asian slab import prices rise on pickup for flat steel

Shipping overcapacity could supply key scrap markets


The weak shipping industry is likely to declining Fe content of domestic iron ore.

 Saudi rebar suppliers offer discounts on lower import offers


negatively affect ship plate demand in the Northern China’s Anshan I&S plans to coming years (see page 7). However, other commission a shipbreaking yard this year,

segments of the steel industry could see while Shougang has formed an alliance with


positive effects.

Tianjin Tianma Shipbreaking.

Global Industry News Steel Price Heat Map World Markets Watch Ship plate demand now hit by 2008 crisis Profile: Baosteel Group …


The first sector to gain has been the Increased use of scrap also has secondary


shipbreaking industry, where the tonnage of benefits. The environmental costs of using scrapped vessels has increased from 6m dwt scrap, in both EAFs and blast furnaces, are in 2007 to over 40m dwt in 2011. As shipping lower than for iron ore, for example.





overcapacity remains and ship deliveries Furthermore, some ship scrap can be reoutpace scrapping rates, shipbreaking is likely rolled without remelting, reducing both


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to continue to grow.

environmental impacts and energy costs.


Steelmakers could benefit, especially in the Steelmakers near shipbreaking centres should Indian subcontinent, a major shipbreaking make the most of the opportunity to reduce centre. A secure supply of quality scrap could the effect of growing environmental

UK: +44 207 176 3800 USA: +1 412 431 4370 Brazil: +55 11 3371 5755

Dubai: +971 4 454 8700 Singapore: +65 6227 7811


limit their dependence on volatile imports.

regulation and raw material cost pressures.


General: Editorial: Marke ng:

Local team:

Meanwhile, some Chinese steelmakers are Tomas Gutierrez investing in shipbreaking to reduce the effect World Steel Review of rising domestic scrap prices and of the






Iron and Steelmaking

 Thailand’s Sahaviriya Steel Industries (SSI) is preparing to restart its 3.5m t/y blast furnace and slab plant in the UK in the next few weeks.

 Pakistan’s Tuwairqi Steel Mills plans to commission a 1.3m t/y DRI plant in Q2 2012.

 Korea’s Hyundai Steel plans to blow in a new 4m t/y blast furnace at its Dangjin works in AugustSeptember 2013 and commission an additional 2m t/y of HRC capacity at the plant by June next year.

 US steelmaker, Nucor, plans to commission a 2.5m t/y DRI plant in the southern state of Louisiana in mid2013.

 Sahara Mining has begun construction of a 1m t/y integrated steelworks in Mali. It hopes to begin producing some 300,000 t/y of rebar at the plant by early 2014.

 Mexico’s Ahmsa plans to complete the renovation of its 60t BOF at Monclava in Spring



 Japan’s JFE Steel has been forced to stop the plate mill at its West Japan steelworks for technical reasons. 180,000 t of output could be lost.

 Korea’s Hyundai Hysco has commissioned a second continuous galvanizing line at its Suncheon works, bringing the plant’s galvanized sheet capacity to 770,000 t/y.

 Rolling operations at Tata Steel’s IJmuiden steelworks in the Netherlands were disrupted by a power failure on 27 January.

 Italy’s Beltrame plans to begin commercial operation of its 250,000 t/y plate mill in Villa Constitución, Argentina, in May.

 Eastern China’s Jiangsu Sunshine has begun commercial production on its newly installed 250,000 t/y tinplate line.

 Taiwan’s Yieh Phui plans to add 300,000 t/y of HDG and 200,000 t/y of colour coating capacity to its Yieh Phui (China) Technomaterial plant in the eastern Chinese province of Jiangsu.

 Turkish steel and pipe maker, Tosyali, has formed a joint venture with Japanese sheet maker, Toyo Kohan, to build a film coated sheet plant in Turkey.


 The Czech republic’s Evraz Vitkovice plans to idle its 120,000 t/y sections mill on 31 March.

 Romania’s ArcelorMittal Hunedoara plans to extend the testing period of its new 400,000 t/y sections mill into midFebruary.

 Turkish reroller, Kocaer Rolling Mill, plans to expand its production range to include angles up to 200mm and UPN sections up to 300mm.

 Gerdau plans to upgrade its Tuta and Tocancipá bar mills in Colombia to produce a wider range of sizes by the end of 2012.

Stainless & Special

 German stainless bar producer, Böllinghaus, plans to upgrade its Vieira de Leiria rolling mill in Portugal to handle more ferritic and martensitic grades.

Tubes & Pipes

 Japanese tube maker, Maruichi Steel Tube, plans to build a 12,000 t/y ERW tube plant in the central Mexican state of Aguascalientes by the end of the year.

08 February (Issue 06-12) 2012

Numbers of the week

Turkey imported 21.1m t of scrap in 2011, up from 19.2m t in 2010. The USA was the largest supplier, shipping 5.7m t of scrap to Turkey.

Brazilian iron ore exports were down 46.5% mom and 19.8% yoy in January 2012 to

18.2m t.

Korean slab exports were up 83% yoy in 2011 to 502,434 t, while imports were down 34% to just over 3.5m t.

US mill shipments fell 6.7% mom in November 2011 to 7.4m s.t of steel products. However, shipments were still up 13.1% yoy.

Italy imported almost 8.8m t of steel products from nonEU countries in 2011, a 12.8% yoy increase.

Chinese exports of seamless pipes were up 28% yoy in 2011 to 4.9m t.

Argentina produced steel at 84% capacity utilisation last year, bringing total production up 9.2% yoy to 5.6m t.

Raw Materials

 Brazil’s Vale may be forced to delay the opening of its floating iron ore terminal at Subic Bay in the Philippines beyond this month.

 Finland’s Outokumpu plans to increase its ferrochrome production capacity to 530,000 t/y in 2013 and reach full ferrochrome production in 2015.

 UK scrap firm, Lord & Midgley, plans to install a 70 t/hr shredder in Hull by the end of



 Korea’s Posco is commissioning a new 12,000 t/y processing centre for grainoriented electrical sheets in the southeastern Indian state of Andhra Pradesh this week.

 German stainless and aluminium distributor, Voss Edelstahlhandel, has commissioned an automated warehouse at its main site at Neu Wulmstorf, near Hamburg. Meanwhile, it aims to commission a new warehouse outside Stuttgart in August this year.

End users

 Japan’s JFE Holdings and IHI Corp plan to merge their United Shipbuilding and IHI Marine United shipyards.


 The World Trade Organisation has reaffirmed a decision criticizing Chinese restrictions on raw materials exports including coke, manganese and zinc.

 China has announced a ban on Vale’s 400,000 dwt iron ore carriers from entering its ports.


 The Sea of Azov has frozen, hindering CIS scrap exports to Iran.

Finance & Management

 Commodity trader, Glencore, has agreed ters for a merger with Swissheadquartered mining group, Xstrata.

 US Steel has sold its 2.4m t/y integrated steelworks in Serbia to the government for $1. The government plans to seek a partner to help operate the plant.

 German industrial groups have formed a new organisation to jointly acquire raw materials. Founding members include Georgsmarienhütte, StahlHolding Saar and ThyssenKrupp.

 Brazilian longs producer, Votorantim, plans to invest R$23m (US$13.2m) in its Barra Mansa unit in 2012.

 India’s Jindal Steel and Power is considering taking a 60% stake in the Gopalpur port in the eastern state of Odisha (formerly Orissa).

 Italian plantmaker, Danieli, has signed a protocol with the government of the southern Russian region of Chelyabinsk to set up a steelworks maintenance centre in the region.

 Brazilian steelmaker, CSN, has raised US$200m through a bond issue.

 UKbased hotrolled coil producer, Mir Steel UK, is being taken to court by Lichtenstein firm, Lictor Anstalt, which claims ownership of the equipment at the hot strip mill.

 India’s Miglani family, coowners of coldroller and galvanizer Uttam Galva, plans to buy a 24.5% stake in struggling flats producer, Lloyds Steel Industries.

08 February (Issue 06-12) 2012

Stocks Watch

 Stocks of HRC, CRC, plate, rebar and wire rod in 26 major Chinese cities were up 6.6% from endDecember to 13.8m t in midJanuary. Wire rod stocks were up 17.5% to 1.3m t, while HRC stocks were up just 0.7% to 4.1m t The country’s port stocks of iron ore were still at around 100m t last week.

08 February (Issue 08-12) 2012

Prices stall, producers fear cold snap

North America flats

US domestic spot HRC prices remained at around $730750/s.t ($805827/t) fob last week, in spite of import offers as low as $640/ s.t cfr Gulf of Mexico.

North America longs

US mill Hbeam list prices were at $870/s.t ($959/t) fob last weeks but some traders claimed to be able to buy at under $800/s.t.

Rising rapidly

Prices stable

Falling rapidly

Latin America flats & longs

Brazilian HRC prices were steady last week at R$1,8201,950/t (US$1,0401,115/t) exworks, with taxes.

N.B.: Africa data n/a

*TSI=The Steel Index

Europe flats

Northwest European domes c coil prices remained at lows of €525 530/t ($686 692/t) ex works for March delivery last week. Meanwhile, southern European producers have booked March HRC deliveries at €520 525/t ex works.

Europe longs

Rebar prices in northwest Europe were down around €510/t last week to €560570/t ($736749/t) DDP in Germany and €550570/t exworks in the Netherlands.

Middle East longs

Egypt’s Ezz Steel has kept its rebar prices for this month at EGP 4,259/t ($701/t) ex works. Saudi Arabian rebar prices remained xed at SAR 2,900/t ($773/t), with taxes.

CIS flats & longs

CIS billet export prices were level last week at $560 565/t fob Black Sea.

China flats & longs

Shanghai coil spot offers were up RMB 1020/t last week to around RMB 3,650/t ($578/t) for HRC and RMB 4,3084,333/t for CRC. Eastern China’s Shagang and Northern China’s Hegang have kept their spot rebar prices steady at RMB 3,744/t and RMB 3,444/t respectively, while Beijing spot rebar weakened slightly to RMB 3,4793,504/t. All prices exclude 17% VAT.

East Asia flats & longs

Korean distributors were offering domestically produced HRC last week at KRW 800,000830,000/t ($713733/t) but some had begun to lift offer prices by KRW 10,00020,000/t. Japan’s Kyoei Steel has kept its February contract rebar prices steady at ¥65,000/t


Steel Market Analysis

Global sentiment weak, but slow pickup still seems possible

Last week’s global market sentiment was weak, particularly in scrap, billet and most finished long products. Turkish scrap import prices fell by $12/t to $437/t cfr according to The Steel Index (TSI). In flats, including plate, the markets were more buoyant, but there remain issues over the sustainability of the recent price rises, given the questionable world macroeconomic trends for 2012. The IMF recently said China’s growth could fall significantly if the euro area “experiences a sharp recession.”

Iron ore prices picked up a little, reflecting some restocking in China after the lunar new year holidays. Coking coal was softer as miners lowered prices to attract Chinese and Japanese buyers themselves facing sagging demand; any tighter supply due to the heavy rains in Australia could well be offset by less purchasing, claimed traders.

In this soft market, activity was limited. Strip mills continued to push for higher prices in Europe and China. Chinese domestic HRC prices fluctuated on slim transaction volumes as coil inventories continued to rise after the holidays. But with stock levels still quite low even if increasing, traders said leading producers may try to raise both domestic and export prices in the coming weeks. In Japan, the stronger yen is hurting exports.

In northern Europe, producers were successful in raising HRC to around €530/t ($695/t), according to TSI. Q1 requirements have mostly been fulfilled, with material booked for March delivery at a €30/t premium over that of early February. However, prices are not likely to increase further in Q2, especially as the euro is strengthening against the dollar.

In North America, the late 2011/early 2012 US strip price increases lost some of their upward momentum. It is unclear to what extent HRC import offers from China and Europe were being shunned due to the long lead times—arrivals would be in May/June. Nevertheless prices have stayed static at around $720750/s.t ($794827/t).

Rebar prices across Germany and the Benelux weakened last week by €510/t as bad weather halted some construction works, but also due to the downturn in scrap prices. In Taiwan, producers cut prices due to the weaker scrap market, whilst for Turkish rebar exports apart from those to Saudi Arabia the market remains soft.

Other forecasts

 Global steel production could fall 2% in 2012, according to World Steel Dynamics. Weaker than expected demand in China and the festering eurozone debt crisis are likely to bring down global demand levels, says the consultancy’s founder, Peter Marcus.

 Meanwhile, Japanese crude steel production in the fiscal year starting 1 April 2012 is likely to be around 23m t below production in the current fiscal year, according to the Japan Iron & Steel Foundation. However, total production should not fall below 100m t, it says. It blames the effect of a strong yen on steel intensive industries, such as automotive and shipbuilding, for the decline in production.

08 February (Issue 06-12) 2012

Latest economic & business news

 China’s official manufacturing Purchasing Managers’ Index (PMI) was up 0.2 points to 50.5 in January. A reading over 50 indicates expansion. However, the manufacturing PMI published by HSBC and Markit was up to just 48.8, indicating a contraction.

 The US economy grew at an annualised rate of 2.8% in Q4 2011, slightly faster than the 1.8% growth seen in Q3. However, around 2% growth was from an increase in inventories and only 0.8% from final sales.

 Germany’s PMI recovered 2.6 points in January to 51, indicating a return to growth for the country’s manufacturing sector. Meanwhile, industrial producer prices were down 0.2% mom in both the eurozone and EU27 in December. Excluding the energy sector, prices were down 0.1% in both areas. Prices for capital goods were stable.

 Japanese industrial production was up 4% mom in December, driven by a growth in automobile production. However, industrial production across Q4 was still down 0.4% qoq as a strong Yen and the eurozone debt crisis limited export opportunities.


 Billet: CIS billet exports were steady at around $560565/t fob Black Sea last week, with one booking heard at $585/t cfr Turkey. CIS offers from the Black Sea to Southeast Asia were made at around $640645/t cfr. However, Brazilian , Japanese, Korean and eastern Russian material was offered at $650/t cfr. Traders expect prices to fall.

 Rebar & rod: Turkish rebar exports softened last week to around $640650/t fob. Bookings were heard at $665/t cfr Saudi Arabia on a theoretical weight basis. Southern European rebar export prices also softened €1015/t last week to around €510520/t ($667680/t) fob. Spanish domestic rebar producers were holding prices steady last week in the face of soft demand and weakening scrap prices. Base prices were quoted at around €290/t, equivalent to €570/t effective delivered.

 Sections: Northwest European sections prices were said to be at the top of the market last week at around €630640/t ($827840/t) effective delivered for category one. Meanwhile, Korean sections mills increased their offer prices last week by around KRW 40,000/t to KRW 980,0001m/t ($866906/t) exworks.


 Coil: Chinese boronadded HRC export offers have risen some $30/t since the start of the year to around $635/t fob, with deals taking place last week at $620625/t fob. Chinese HRC exports to Korea were last heard at $630640/t cfr and traders were not expected to accept higher offer prices. Southeast Asian imports of thin gauge rerolling HRC were recently booked at $670680/t cfr Indonesia and Thailand from Korea and Japan, a $2030/t increase since the start of the year.

 Plate: Chinese commoditygrade plate export prices remained firm last week at $615620/t fob. US domestic plate prices were steady last week at around $940960/s.t ($1,036 1,058/t) exworks for A36. However, Nucor was trying to push through an additional $40/s.t increase in its heattreated plate prices.

Raw Materials

 Iron ore: Seaborne iron ore prices strengthened slightly last week in spite of slow buying. The Steel Index’s reference price for 62% Fe fines ended last week at $143.3/dmt cfr China, up from $139.8/dmt a week earlier.

 Scrap: A Turkish mill booked a mixed cargo of shredded, HMS 1&2 90:10 and bonus grade scrap last week at $438/t cfr, around $10/t below earlier bookings. Other mills are holding off buying as they expect prices to fall further. The Steel Index’s reference price for HMS 1&2 80:20 was down $12/t last week to $437/t cfr Turkey. Taiwanese scrap import prices were also down last week to around $430435/t cfr for HMS 1&2 80:20. Japanese H2 grade scrap export prices weakened to around ¥30,50031,000/t ($399405/t) fob although at auction last week H2 attracted a winning bid of ¥30,800/t fas, equivalent to ¥31,800/t fob. Meanwhile, The Steel Index’s reference price for US domestic shredded scrap was down $23/l.t last week to $446/l.t


08 February (Issue 06-12) 2012

Seaborne iron ore prices turn upwards 155 150 145 140 135 130 7 14 21
Seaborne iron ore prices turn
14 21 28 5 12 19 26 2
16 23 30 6
Nov Nov Nov Nov Dec Dec Dec Dec Jan Jan Jan Jan Jan Feb
11 11 11 11 11 11 11 12 12 12 12 12 12
Indian iron ore exports, 63% Fe fines, $/dmt cfr China
Source: SBB Price Analyser

Ship plate demand may now be hit by 2008 crisis

The global ship building industry has seen a very delayed reaction to the financial crisis of 2008. Thanks to its long lead times (at times over three years), orders placed before the crisis are still being built and as a result demand for ship plate, and other steel products for ship building, has remained firm. But the market now appears to have peaked and ship building is entering a period of decline, SBB Insight points out.

Ship deliveries, and the value of steel consumed, set to drop

Vessel deliveries are thought to have reached an alltime peak of around 160m deadweight tonnes, a measure of carrying capacity, in 2011. However, on a compensated gross tonne basis (a measure that more accurately reflects the steel content of vessels), the market peaked in 2010 at 52m cgt. The number of vessels delivered actually fell 20% yoy in 2011.

The slowdown in steel demand from shipbuilding is partly due to the kind of ships being built. Deliveries of special vessels, such as LNG carriers, container ships and cruise ships, fell 35% last year, according to Clarkson Research Services (CRS). In comparison, deliveries of dry bulk vessels, which are less steel intensive, were up almost 20% to top 1,000 ships for the first time.

Shipyard order books in general have also shown a strong decline since the 2008 crisis. Orders placed globally in 2011 were down around 50% yoy and the 115m cgt on order books at the end of 2011 was around 55% of the tonnage on order in 2008. Furthermore, the global dry and bulk cargo and container shipping markets are likely to see excess capacity until 2016, predicts Marine China News. This means order levels are likely to keep declining in the medium term.

But while orders for bulk vessels fell 70% last year, orders for other kinds of vessels saw strong orders, notably LNG carriers and container ships. Although overall volumes are likely to fall, the steel intensity of ships being built could therefore be slightly higher.

Korea and China compete for top slot

Although shipbuilding occurs in many countries, the industry is dominated by East Asian ship builders. China, South Korea and Japan together accounted for almost 95% of shipyard deliveries by cgt in 2011, according to CRS. The region’s dominance has been cemented by the rapid rise of China’s ship building industry.

China overtook Korea as the world’s largest ship builder in 2010 and has delivered over 1,000 vessels for the last two years in a row. Ten years ago China’s output was below that of Europe, a relatively minor player in terms of volume.

However, Korea’s ship building industry is faring better than the Chinese in the current slow down. Korea’s shipbuilders received orders for 13.6m cgt of ships last year, compared to China’s 9.2m cgt. In terms of value, orders to Korean shipbuilders came in at $48.2bn in 2011, compared to just $19.2bn to China’s industry. This is because of the specialisation of Korean shipbuilding. Only 8% of Korean orders were for bulk freight ships, compared to 63% for China. 51% of Korean orders were for container vessels, while 17% were for highvalue LNG carriers. An article by Marine China News notes that the value of some specialist vessels, such as seismic survey vessels, is over $600m, while a 30,000 dwt bulk carrier costs under $25m.

Ship building steel demand is locally focussed

Any change in steel demand from ship building is likely to affect local suppliers most. This is particularly true as the wide range of sizes and grades necessary in shipbuilding make bulk import orders impractical for all but the most commodity grade ship plate. A single ship may need over 200 different specifications of steel to complete and so orders for individual sizes tend to be small. This also means that, although stockists can hold small amounts of grade A commodity ship plate, most shipments are made direct from mill to shipyard.

08 February (Issue 06-12) 2012

Ship deliveries by country/region (million cgt) 60 50 40 30 20 10 0 2008 2009
Ship deliveries by country/region
(million cgt)
2011* 2012
Other Asia
Source: Clarkson research Services
*es mated.
Future years make no allowance for new orders.
Vessel orders placed in 2004‐2011 (million cgt) Source: Clarkson Research Services
Vessel orders placed in 2004‐2011
(million cgt)
Source: Clarkson Research Services

This report has been summarised from the 26 January issue of SBB Insight.

08 February (Issue 06-12) 2012

Company Pro le: Baosteel Group

What is the company? Baosteel Group is China’s third largest steelmaking group by volume and operates four steelmaking subsidiaries: Baoshan I&S, Ningbo I&S, Guangdong I&S and Xinjiang Bayi I&S, which have operations in Shanghai municipality, Jiangsu, Shandong, Zhejiang, and Guangdong provinces, and Xinjiang Uyghur Autonomous region. Baoshan I&S, is listed on the Shanghai Stock Exchange (SHA:600019), as is Ba Yi I&S (SHA: 600581). The group company is 100% owned by the national State Assets Supervision and Administration Commission.

What does Baosteel produce? Baosteel group produced around 43.3m t of crude steel in 2011, down slightly from 44.4m t in 2010 due to the closure of capacity in Guangzhou. Output was up at all other facilities. The company’s Baoshan plant in Shanghai is the world’s third largest steelworks with a crude steel capacity of 16.9m t/y. It also has other plants in Shanghai, over 5m t/y of crude steel capacity in both Xinjiang and Zhejiang, 3.9m t/y in Guangdong and 1.7m t/y in Jiangsu. The company produces a full range of flats longs and tubes but primarily produces flat products including HRC, CRC, HDG and auto sheet. It has targeted investments at higher valueadded products such as tinplate and electrical steels.

What is the company’s financial position? In 2011 the group’s main listed subsidiary, Baoshan I&S, reported net profits down 43% yoy to RMB 7.3bn ($1.2bn), while revenues were up 10.2% to RMB 223.1bn.

Why is the company interesting?  Baosteel plans to build a new 10m t/y steelworks at Zhanjiang in Guangdong province. A first phase, possibly of around 5m t/y, was approved by the National Development and Reform Commission (NDRC) in late 2011. In order to secure the approval of the NDRC Baosteel has agreed to shut down around 23m t/y of outdated steelmaking capacity at Guangzhou Iron & Steel, which has since been sold to Guangzhou SASAC and is no longer part of Baosteel Group. Baosteel plans to commission two new stateoftheart 5,700 cu

m blast furnaces at Zhanjiang, which will be the second largest furnaces in the world behind Shagang’s 5,800 cu m blast furnace in Jiangsu province.

 Baosteel’s Luojin Port steelworks in Shanghai is home to China’s only two Corex ironmaking units, each with 1.5m t/y of ironmaking capacity. Baosteel hoped the units would lower costs, but the units have been operating at a loss since they were commissioned. Just months after commissioning the second unit, Baosteel announced in August 2011 that it was planning to relocate the first unit to its subsidiary in Xinjiang. The government has been strictly regulating all capacity expansions. However, it is encouraging mills to build facilities with cuttingedge technology, such as Corex.

 In order to improve its profitability Baosteel’s main listed arm, Baoshan I&S, has pledged

to sell its special and stainless steelmaking operations to its parent company, while non

core businesses such as property development and logistics services could support its balance sheet, analysts say.

such as property development and logistics services could support its balance sheet, analysts say.

A Brief History

2011 Baosteel commissions its second 1.5m

t/y Corex plant in Shanghai and plans to move the first to Xinjiang

2010 Baosteel begins operating its first

230,000 dwt iron ore carrier

2009 The group buys Ningbo I&S in

Zhejiang province

2008 Baosteel merges with Guangzhou I&S

and Shaoguan I&S in the southern province

of Guangdong.

2008 The group commissions China’s first

Corex unit in Shanghai


Baosteel buys Xinjiang’s Bayi I&S


Bashan I&S is listed on the Shanghai

Stock Exchange

1998 Shanghai consolidates its main steel

companies, Bashan I&S, Shanghai Metallurgical Holding Group and Shanghai Meishan Group to form Baosteel Group

1977 Baoshan I&S is formed in Shanghai

Some of Baosteel Group’s steel subsidiaries:

Baoshan I&S Nantong Baosteel I&S Ningbo I&S The Zhanjiang project Bayi I&S Yantai Baosteel Pipe