Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Chinese steelmaker, Baowu Steel Group (Baowu) plans to expand its capacity and take it up to 200mn mt, from the existing 100mn mt. The expansion will span across the next five years from 2021-2025, according to China Metallurgical Information and Standardization Institute. The steelmaker ,on Tuesday, commenced the construction of a high-grade non-oriented silicon steel project with a total investment at CNY2.72bn ($416.90mn). The facility is likely to become operational by March 2023.


Boawu Steel aims to produce 500,000mt of steel products annually which would cater to the increasing requirements in the new energy vehicles (NEV) sector. The project thus plans to produce high-grade non-oriented silicon steel consumed for the rotor and stator in NEV electric motors. 


Total high-grade non-oriented silicon steel capacity could reach 4mn mt, rising by 1mn mt in the coming years. According to the statement to the Chinese metallurgical institute, the company accounts for a 30pc share of the global high-grade non-oriented silicon steel market. China accounts for a 60pc of the market. 


China holds the status of the world’s largest auto producer and is gradually shifting its focus on the upcoming NEV market. The government aims to increase NEV sales to at least one-fifth or over 20pc of total vehicle sales in the country by 2025. 


Capacity to cross 200mn mt by 2025

The company states it will begin operations at Zhanjiang Steel’s blast furnace no.3 before July 2021. By 2025, it aims to build two more blast furnaces and three basic oxygen furnaces at the Zhanjiang Steel plant. After these ramp-ups, the total annual capacity at the plant will reach 21mn mt from the present 8.9mn mt. 


Maanshan Iron and Steel also plans to expand its annual capacity to 40mn mt. Baowu would also close obsolete units at its various subsidiary plants and obtain steelmaking licenses from other Chinese producers as it tries to expand capacity.


As the Chinese government aims to consolidate 60pc of the entire steelmaking capacity with around ten leading companies. This would lead to many mergers and acquisitions in the coming days. 



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