Baoshan Iron & Steel Co.’s plan to sell some stainless steel and specialty-steel assets may be a prelude to relocating the units, Huachuang Securities Co. said.
Baoshan Steel proposes to sell the assets to parent Baosteel Group Corp., China’s biggest publicly traded steelmaker said in a Dec. 11 filing to the Shanghai Stock Exchange.
“Judging from the statement, relocation of Baoshan’s stainless and specialty-steel units has been put on the agenda,” Huachuang analyst Han Zhenguo, based in Shanghai, said in a note dated Dec. 11. Huachuang recommends a “buy” on the Baoshan Steel stock.
Yu Hong, a securities affairs representative of Baoshan, declined to comment on the report.
Baoshan Steel’s main plants, located on the northern outskirts of Shanghai, account for almost 25 percent of the city’s energy demand and contribute about 6 percent of its gross domestic product, Huachuang said. China, the world’s biggest steelmaker, is seeking to move some alloy-making operations to reduce energy consumption and cut pollution in cities, according to the nation’s steel industry plan for 2011-2015.
Baoshan may swap assets with its parent while selling the units or buy assets from other companies, Huachuang’s Han said.