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Shanghai Baosteel Group and ThyssenKrupp of Germany begin the first phase of production at their US$1.43 billion steel plant in Shanghai today in a bid to meet growing demand for stainless steel on the mainland.

As German Chancellor Gerhard Schroeder and Shanghai Mayor Xu Kuangdi look on, the two companies will put in operation the cold rolling mill at their venture - Shanghai Krupp Stainless.

The project, ThyssenKrupp's biggest joint venture in Asia, will be an integrated stainless steel plant to be completed in 2007.

'In a few years China will be the world's largest national market for stainless steel,' said Gerhard Mairhofer, general manager of Shanghai Krupp.

Mr Mairhofer estimated that annual demand for cold-rolled flat stainless steel in China was about 1.6 million tonnes and growing at 7 per cent to 10 per cent a year.

He said 70 per cent of the total was imported, and that important substitution was a key goal of the project.

'There is steady and strong growth for cold-rolled steel,' he said, adding that demand was largely from household appliances and cooking utensils as well as cars and architecture.

ThyssenKrupp has 60 per cent of the joint venture, which was formed four years ago, while Shanghai-based Baosteel has 40 per cent.

State-run Baosteel joined the project during the consolidation of steel companies in Shanghai with its takeover of Shanghai Metallurgical Holding and Meishan Steel.

The stainless steel project gained financial assistance from International Finance Corp - a World Bank affiliate - and Germany's export financing bank Kreditanstalt fur Wiederaufbau.

The first phase of the project has a capacity of 72,000 tonnes a year and carries a US$295 million price tag. Work has begun on a second phase that will more than double output by 2004.

ThyssenKrupp, which has 1,100 employees on the mainland, has also teamed up with Angang New Steel to build a galvanising plant in Dalian and it has taken a role in the Transrapid project that will use magnetic levitation technology for a high-speed train in Shanghai.



Sino-German joint steel mill starts