Baosteel to Suspend 10 Million-Ton Iron and Steel Project in Zhanjiang

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Researched by Industrial Info Resources (Sugar Land, Texas)--Due to the enormous surplus of production capacity in the iron and steel industry, Baoshan Iron & Steel Corporation (Baosteel) (Shanghai), the largest iron and steel producer in China, has received orders from the National Development and Reform Commission (NDRC) to suspend the 10 million-ton iron and steel project proposed in Zhanjiang City in southern China's Guangdong province. Meanwhile, Wuhan Iron & Steel Corporation's (Wuhan, Hubei) 10-million-ton iron and steel project proposed in Fangchenggang City in the Guangxi Autonomous Region is also suspended, according to a news conference regarding the control of surplus production capacity that was jointly convoked by 10 Chinese governmental departments, including the NDRC, the Ministry of Industry and Information, and the Ministry of Finance in Beijing on October 19.

In 2008, China's output of crude steel reached 500 million tons, the largest output of any country, but the average production capacity of steel producers remained low. Both projects received approval from the NDRC to start pre-stage preparation in the beginning of 2008 (prior to the outbreak of the global financial crisis) upon consent from the State Council. The main purpose of the approval of these two projects was to adjust the industrial structure at that time.

However, because of the impact of the financial crisis, global iron and steel demand is expected to drop from last year's 1.27 billion tons to about 1.1 billion tons this year. The NDRC has named iron and steel, cement, flat glass, coal chemical, polysilicon and wind power as the six key industries requiring regulation of surplus production capacity. "The Industry Coordination Department of the NDRC is working on the preparation of the 'Guideline Directory for Industry Structural Adjustment,' which will be published shortly," said Bilin Xiong, Inspector of the Industry Coordination Department.

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