China's steel production faces constraints
(Xinhua)
Updated: 2004-02-27 11:33

Insufficient supply of raw materials supply and electricity, coupled with inadequate transport capacity, would constrain the growth of China's steel industry this year, said an industrial expert in Beijing on February 26.

Luo Bingsheng, vice president of the China Iron and Steel Association, said the supply of iron ore and coke had been strained in the past two years.

"Iron ore reserves exploitable on an economic scale total 8 billion tons, which means in less than 30 years they would run out, said Luo, who formerly headed the steel giant Shougang Group.

According to a forecast, "China will have to increase the iron ore import by 33 million tons this year to meet domestic steel production" he said.

A Chinese worker walks past piles of coiled steel products at Hangzhou Iron and Steel Co Ltd, in Hangzhou, capital of the eastern province of Zhejiang. China, which consumes about a quarter of the world's steel products, is expected to devour 14 percent more in 2004, as the country's strong economic growth led to a construction boom and higher steel demand, analysts said. [Reuters]

China imported 148 million tons of iron ore in 2003, surpassing Japan and the European Union to become the world's biggest iron ore importer.

Dong Zhihong, a leading analyst with the association, revealed that China is actively negotiating with big ore producing countries, including Australia and India, about forging a closer alliance.

Luo said inadequate electricity supply and transport capacity will also bottleneck the growth in steel production.

Many areas in China experienced temporary blackouts in 2003 and a similar scenario has been predicted this year. The rapid growth in raw materials and finished products of the steel industry has imposed great pressure on railway and shipping sectors over the past few years, and no obvious improvement is in sight for this year.

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