SHANGHAI-BASED Baosteel Group, parent of China's largest listed steel maker, is seeking to transform from a manufacturer to a service provider such as enhancing its e-commerce business, as steel overcapacity still looms.

The group's plan includes expanding a newly launched e-commerce platform for steel and iron trading, enhancing logistic service facilities, and providing more tailor-made products for customers, Xu Lejiang, chairman of Baosteel Group, said at the fifth Baosteel Biennial Academic Conference.

"Steel makers like us are challenged by both an economic slowdown and industrial overcapacity," Xu said. "It is also a global trend that requires steel manufacturers to transform to a manufacturing service provider that always prioritize customers' needs."

Xu forecast that steel output in China this year to grow between 1 and 2 percent annually, down from 3.1 percent last year and a 9-percent rise recorded in the first four months this year, as steel mills are developing a more "rational" outlook about China's weakening economic growth.

"As supply continues to exceed demand in the steel market, e-commerce will be more important as it greatly helps the exchange of information and cuts trading costs" Xu said.

On May 31, the group started an electronic trading platform co-funded by the Baoshan District government as it aims to provide financing, warehousing and logistics as well as consulting services to firms in the steel supply chain.

Xu suggested China should unveil more tax reforms to help manufacturers enter the service market, and further open the steel market to foreign capital.

The group will also boost support for high technology industries and Xu said part of the original site of the group's factory in Shanghai will be used for cleaner businesses as the group bids to cut 5.8 million tons of iron capacity and 6.6 million tons of steel capacity in the city, amounting to 30 percent of its total capacity locally.