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Baoshan Iron and Steel Co Ltd's fourth 1,800mm cold-rolling mill officially started operations yesterday, but analysts say this will not impact the auto market in the next five months.
The cold-rolling mill has three production lines churning out sheets for car makers, electrical appliances and ships.
Yong Zhiqiang, the senior analyst at Haitong Securities Company, said: "The auto sheets production line will not reach smooth operation until the end of year 2005, thus it will not affect the current market price of auto sheets in the short term."
However, Yong added that once it is fully operational, China will be less dependent on imported quality auto sheets.
The production capacity of the auto sheets line in full operation will reach 1.9 million tons, but spokespersons for Baosteel Group, the parent company of Baoshan Iron and Steel Co Ltd, did not reveal when they will realize full operation of the production line.
Currently, more than 40 percent of auto sheets are imported.
Baosteel Group already plays a dominant role in the auto sheets market in China, with a 53 percent share.
According to statistics from the Shanghai Steel Electronic Exchange, Baosteel Group produced more than 1.5 million tons of auto sheets last year.
Liu Jianyun, the senior researcher at the Shanghai Steel Electronic Exchange, thinks the new auto sheets line will produce 50,000 tons by the end of this year.
Li Haiping, the vice-president of Baoshan Iron and Steel Co Ltd said: "Though the cold-rolling mill just started operating, there have already been orders from major Japanese auto manufacturers such as Nissan, Honda and Toyota for auto sheets."
The 1,800mm project is among one of four major plans officially inaugurated by Baoshan Iron and Steel yesterday.
The others are a heavy plate rolling mill, continuous casting mill and the No 4 Blast Furnace.
Industrial analysts believe these projects will substantially increase the company's overall standing.
Li Haiping noted that the company currently ranks No 7 in terms of production capacity, although it was recognized as No 3 by World Steel Dynamics, the world-leading steel information service company, last year in terms of overall performance.
Though shares of Baoshan Iron and Steel fell by 10 percent yesterday, Chen Ying, the Chief Financial Officer of Baosteel Group said: "The additional fund raising of Baoshan Iron and Steel Co Ltd is going very well, thus we will not set an ex-rights day."
(China Daily April 28, 2005)
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