On September 27, Shanghai-based Chinese steel giant Baosteel officially announced that, for the purpose of avoiding increases in its operating losses, it has suspended production at its plant in Luojing, Shanghai.
Baosteel stated that the losses incurred by the plant due to weak demand and high costs prompted the shutdown. However, the company did not mention when production would resume. The plant in Shanghai's Luojing district mainly produces steel plates used for shipbuilding, oil rigs and in the construction sector.
The Luojing plant was more costly to run because its two furnaces use the Corex smelting process of gasifying non-coking coal to produce pig iron. In 2008, Baosteel had acquired the Luojing plant, which has a current annual output capacity of 3 million mt, for RMB 14 billion.
According to some market players, more production cuts are expected among Chinese steelmakers, which are facing tight profit margins or losses amid overcapacity, low steel prices and sluggish steel market conditions.