Central China’s Wuhan Iron and Steel Group (Wugang) could be gaining control of significant galvanising and colour coating capacity after signing an agreement with the local government of Yichang city, just to the west of Wuhan. However, the mill may be under pressure to support a local government with a scheme that apparently has little to do with its own commercial plans, Kallanish notes.

Wugang agreed to supply logistical and technical support, and raw materials, for an un-named coated sheet project in Yichang city. The city plays host to Yichang Three Gorges Quantong Coated sheet, which had targeted a hot dip galvanising and colour coating capacity of 10 million tonnes/year before idling its facilities in 2013. This occurred when the colour coater was unable to secure sufficient working capital. Wugang had been interested in acquiring the facilities but decided against it.

The loosely-termed agreement between Wugang and Yichang appears to have political support, not only from the Yichang government but also from the national State-Owned Assets Supervision and Administration Commission.

The move could be seen as an attempt opportunity to enter coated sheet production cheaply at a time when the logistics and warehousing sector is the only part of real estate still booming. Wugang could certainly be heavily incentivised by local government to restart some of Quantong’s idled facilities, Kallanish notes.

Wugang’s main focus for its steel arm however has been its automotive sheet and its new steelworks in southern China. It plans to commission a 9m t/y greenfield coastal steelworks at Fangchenggang in Guangxi province, starting with a 2.1m t/y CRC mill in May this year.