Angang New Steel, the listed unit of China's second-largest steelmaker, plans to set aside three billion yuan as capital expenditure for the second half this year to boost production capacity, brushing aside concerns of an industry glut.
Angang, which on Monday said its half-year profit surged 154 per cent, invested two billion yuan in the first half. Coupled with the plants it bought from its parent in January, its annual output capacity will reach 16 million tonnes by the end of this year.
The company also plans to invest 22.6 billion yuan to build a steel production plant at Bayuquan port in Yingkou in Liaoning province, adding five million tonnes to capacity after completion in 2008.
Angang's expansion plan came as market watchers estimated steel output in China would reach 510 million tonnes by 2010, outstripping demand of 480 million tonnes, based on current capacity and new projects coming on stream.
However, Fu Jihui, the executive director and secretary to the board, yesterday said that the government's plan to squeeze out small, inefficient and pollution-prone mills would ease supply.
'The government aims to eliminate 100 million tonnes capacity at such plants, thus there is no oversupply problem,' Mr Fu said.
