Baoshan Iron and Steel Co, China's second-biggest stainless steel producer, is raising output as building demand improves because of China's 4-trillion-yuan (US$586 billion) stimulus plan.

The Shanghai-based company raised output for the first quarter, up from the previous three months, as demand gained and plant maintenance was completed, Vice President Chen Ying said over the phone with Bloomberg News on Monday, without giving details.

Baosteel has annual capacity to produce as much as 1.5 million tons of hot-rolled stainless steel products.

China, the world's largest steel consumer, is investing in housing, railways and other infrastructure to support sagging growth, raising metal demand. Plant utilization rates at major stainless-steel producers jumped to 90 percent in the first quarter from about 50 to 60 percent in the December quarter, Macquarie Bank Ltd said on Monday.

"Our utilization rate has risen to the same level as the first quarter of last year," Chen said from Shanghai. "Demand in building decoration is picking up from the fourth quarter."

Rising stainless steel output is boosting demand for the ingredient nickel pig iron, Macquarie analysts led by Henry Liu said in a note.

Still, Shanxi Taigang Stainless Steel Co, China's biggest producer of the rust-proof metal, hasn't seen signs of a significant demand recovery, said Bo Chaobin, a sales manager.

Taigang plans to make 150,000 tons of the alloy this month, according to Bo.

(Shanghai Daily February 17, 2009)