(Yicai Global) Nov. 23 -- Shares of Baoshan Iron & Steel jumped after the listed arm of steelmaking giant China Baowu Steel Group said it will spin off its subsidiary Baowu Carbon, the world’s biggest coal tar processing firm, to list it on the ChiNext in Shenzhen.

Baoshan Iron & Steel's stock price [SHA: 600019] surged as much as 5.4 percent to CNY6.78 (USD1.10) intraday. The shares are more than 8 percent up this year.

The steelmaking behemoth, also known as Baosteel, will spin out the unit to further focus on its primary iron and steel business, the Shanghai-based parent said in a statement to the Shanghai Stock Exchange yesterday. Baowu Carbon will issue up to 250 million shares on the Nasdaq-style market for fast-growing enterprises, or 25 percent of its equity after the issuance.

Baoshan Iron & Steel will hike its investment in carbon-based new materials via the listing to make the maker of coal liquids bigger and stronger to enhance its profitability and competitive edge, per the statement. Coal tar can be used to make electric conductors which pass on electric current into liquids or gases.

Baowu Carbon will expand its industrial chain in the field of carbon-based new materials and pay attention to needle coke, anode materials, graphite electrodes, carbon fibers, and environmentally friendly resins, the statement added.

The unit has been having a great year due to rising raw material prices amid increasing demand. In the first half, Baowu Carbon reported CNY523 million (USD81.9 million) in net profit after recording a sum of CNY88 million (USD13.8 million) in the 12 months of 2020. In 2019, its net profit was CNY339 million.

Editor: Emmi Laine, Xiao Yi