BAOSTEEL Group, China’s second-largest steelmaker by output, has shut a blast furnace as part of a national restructuring effort to reduce overcapacity in the sector, the company said.

    China, the world’s biggest producer and consumer of steel, is prioritizing supply-side reform in both steel and coal due to sagging prices to help overhaul its industrial sector.

    “The move is an important measure to echo the State Council’s urge to cut overcapacity ... It will also encourage China’s steel industry to optimize structure and upgrading,” Baosteel said in a statement Tuesday.

    China has vowed to slash steel capacity by 100 million to 150 million tons over five years from around 1.1 billion tons.

    Baosteel’s stainless steel unit permanently halted production at a blast furnace that produced 2.5 million tons of pig iron a year at its Baoshan plant in Shanghai, it said.

    Pig iron from this furnace had been used to make carbon steel products. Baosteel Stainless, one of China’s top stainless steel producers, will keep running its stainless steel production with an annual output of about 1 million tons.

    Baosteel, the parent of the country’s top listed steelmaker Baoshan Iron & Steel Co. in terms of market value, produced around 35 million tons of crude steel last year, down 2.6 percent from 2014, and second to Hebei Iron & Steel Group, government data showed.

    Baosteel pledged in 2012 to cut its annual production capacity in Shanghai by over 6 million tons by 2017 to help in the city’s efforts to cut pollution. (SD-Agencies)