According to a report issued by China's Ministry of Industry and Information Technology (MIIT) on February 16, Chinese steel companies will come under pressure this year as the government restructures the economy and as competition heats up in the global market,
China produced 626.65 million mt of crude steel in whole of 2010, up 9.3 percent from 2009. This increase rate was 4.2 percentage points lower than the year-on-year growth rate recorded in 2009, the MIIT remarked. As regards 2011, the MIIT forecasts that Chinese crude steel output will increase by only five percent to 660 million mt, as the central government steers the economy towards a more sustainable path in the first year of the country's 12th five-year plan (2011-2016). "In 2011, the rapid development stage of China's steel industry is coming to an end," the MIIT stated in its report.
China's steel industry is expected to face greater pressure due to requirements to conserve energy and cut emissions, said the MIIT report, adding that China eliminated 44 million mt of outdated iron and steel production capacities last year. The MITT went on to warn that strong international competition would hurt China's steel exports.
The MIIT also predicted that iron ore prices would remain high, driving up the costs of Chinese steel companies. In addition, China's total import volume of iron ore is expected to remain at around 600 million mt in 2011, it said.