Shanghai-based Baosteel Group Corp Ltd, the country's second biggest steel maker by output, said it will move 30 percent of its capacity out of Shanghai.

After the relocation, Baosteel's iron capacity in Shanghai will be cut by 5.8 million tons and its steel capacity will decrease by 6.6 million tons.

Baosteel's total annual capacity in Shanghai is 22.25 million tons.

The plan was announced as China's steel industry, which has significant overcapacity, is facing difficulties this year. In the first quarter, the industry lost over 1 billion yuan ($157.41 million), compared to a 15.8 billion yuan profit in the same period last year.

Shanghai's labor costs are among the highest in the country. Moving out of Shanghai may help Baosteel cut costs and raise profit margins.

gaochangxin@chinadaily.com.cn