China: Baosteel postpones Zhanjiang furnace start up, puts new capacity on hold

Chinese steel giant, Baosteel Group has recently informed that the start of operations at the company's Zhanjiang Dongshan Base No. 3 blast furnace (BF), originally scheduled for Aug'21, may get delayed, as per the latest reports.

In fact, there is uncertainty as to whether operations could be initiated at the blast furnace at all this year. In view of China's overdrive to implement low-carbon industrial practices and green manufacturing projects, coupled with the objective of controlling the country's crude steel output to that of 2020 levels, steel companies are going slow on aggressive capacity swaps through the coal-consuming integrated route.

Delayed start
As per sources, Baosteel is making overall adjustments to operations in the light of these factors keeping the demand-supply balance in view. Construction of the No. 3 blast furnace project had commenced at Baosteel's Zhanjiang Iron and Steel works in Guangdong province on 29 Mar'19.

With an investment of RMB 18.85 billion, the project includes a 5,050 m3 blast furnace, a 350 t converter, a 1,780 mm hot-rolled coil production line and a 1,750 mm cold-rolled coil production line.

At peak operations, the Zhanjiang project has been designed to achieve an annual capacity of 12.25 mn t of molten iron, 12.53 mn t molten steel, and 10.81 mn t of steel products.
Baosteel's 2021 quarterly report showed that the company's main operating income stood at RMB 83.821 billion, an increase of 39.33% year-on-year. The net profit attributable to the parent was RMB 5.359 billion, an increase of 247.85% y-o-y. While the steelmaker's investment income is RMB 683 million, financial expenses are pegged at RMB 394 million, while the gross profit margin is 14.52%.