OREANDA-NEWS.  Chinese state-controlled producer Baosteel has started operations at its 8.75mn t/yr steel project in south China's Zhanjiang.

The company on 25 September lit the 5,050m3 No.1 blast furnace with a total production capacity of 4.1mn t/yr. Its construction started in 2013.

The start-up is a key step in China's aim to retire outdated, polluting production capacity, Baosteel said. The new plant will manufacture steel using eco-friendly technology, targeting to start full production at the plant in Guangdong province by September next year.

The flat steel producer has a 50pc market share in China's auto-grade steel market, commanding a premium for its products.

While Beijing has set a target of eliminating 80mn t/yr of steel capacity for the country's 2012-17 five-year economic plan, some large state-controlled plants are adding capacity, especially for flat steel production, used in the automobile, appliances, shipbuilding and machinery sectors. These capacities are expected to replace backdated production, as Beijing seeks to sharply reduce emissions.

Fellow Chinese producers Rizhao Steel, Wisco, and Chongqing Steel are building projects with more than 8mn t/yr of capacity each, while Baotou Group is building a 5mn t/yr plant.