Over 70% of high-end steel products required for China’s manufacturing industry are imported from abroad. Such a huge gap presents both opportunities of growth but risks competition between domestic suppliers.

Baosteel’s Zhenjiang project will be mainly oriented towards the high-end market through production of only a few specialised steel products, such as for the automotive market, domestic appliances and machinery.

Baosteel’s strategy of specialising will take the lead in optimising the product mix in the domestic steel industry and increase its market share among strategic customers. This will be a crucial step towards industry restructuring at a painful time when China’s steel market is suffering from falling profits and even losses.

Likewise, Wusteel’s project in Fangchenggang in the south of China is also targeted at high-end manufacturing of automobiles and domestic appliances It also has ambitions to export to south east Asian countries as it expands its capacity in the future. But, despite its low-cost land allocation and labour, the project can hardly find adequate demand within the autonomous region as it is still one of the least developed in China and export markets still have to be found, and are likely to prove less profitable than the domestic market.

Source: China Metals infochn@public.bta.net.cn