Although over-investment has been curbed through the use of
macro-controls, the steel sector needs to improve its production
structure, distribution of steel firms, industrial organization and
resources, according to Assistant Commerce Minister Huang Hai.
He was speaking at a recent symposium held to discuss steel
market forecasts and related countermeasures. It was held jointly
by the Ministry of
Commerce, National Development and Reform Commission (NDRC),
State Council Development Research Center, and China Logistics and
Procurement Association earlier this month.
Huang outlined three challenges for the sector's development
next year:
First, fixed-asset investment growth has fallen rapidly, but it
is still higher than the national average. For example, investment
between January and September increased 34.2 percent over the same
period last year, 4.3 percentage points higher than the national
average.
Second, old steel equipment and technologies may be increasingly
reused. In the third quarter of this year, the price hike of steel
products stimulated production. Equipment and technologies that
don't accord with national standards were used to maintain
supply.
Third, fast growth in exports places a strain on domestic
supplies. Since May, exports of steel products exceeded one million
tons, the highest level in history. This puts a strain on energy
and mineral resources.
Zhu Hongren, vice director of the NDRC's Economic Operation
Bureau, attached particular importance to structural adjustment and
technology upgrades.
He said that demand might decrease due to the government's
macro-control measures. China's economic growth in 2005 will
decrease a little, which will directly impact on industrial
production. Slowed fixed-asset investment will reduce demand for
steel, while steel export demand might also be influenced.
Currently, steel production capacity is about 310 million tons,
and potential additional capacity is 150 million tons. Zhu warned
that oversupply and improper production structure might aggravate
competition and trigger a price war.
On the other hand, Zhu said that supply of resources like coal,
electricity and oil, and transportation capacity?are expected
to worsen next year. This will increase production and
transportation costs.
(China.org.cn by Tang Fuchun, December 16, 2004)