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Chinese steel exports no threat to rivals(11/17/03)

   The growth in China's steel production will not harm other international markets in the years to come, an industry association said.

    "Our production growth will continue to mainly depend on the domestic market," said Qi Xiangdong, deputy secretary-general of the China Steel and Iron Association.

    "The main target of China's steel industry is to increase shares of the locally made steel products on the domestic market, not to aggressively export," Qi said.

    He made the remarks in response to recent claims by World Steel Dynamics, the leading steel information service based in the United States, that "China's unstoppable steel industry" will pose threats to other countries' steel sectors over the next 10 years.

    "China's steel exports now only account for some 3 per cent of its total steel production and do not jeopardize any other countries' steel industries," Qi said.

    Steel output in China stood at 191.87 million tons during the first 10 months of this year, an increase of 20.5 per cent from a year ago, according to statistics from the association, which consists of all of the nation's major steel companies.

    The steel exports grew by 28 per cent year-on-year to 5.71 million tons during the period.

    Qi predicted China's total steel output and exports this year will reach 215 million tons and around 7 million tons respectively.

    "In contrast, China's steel imports have been soaring, which helps ease world's steel trading conflicts," he said.

    The nation imported 31.05 million tons of steel during the first 10 months of this year, an increase of 51 per cent from the same period last year. Its total steel imports will reach 36 million tons this year, up from 24 million tons last year, Qi said.

    "China will remain a big net importer of steel, especially the high-end products, in coming years as a result of its strong steel demand," he said.

    Steel producers from the European Union (EU), Japan, South Korea and Russia have started to turn towards the Chinese market since the United States imposed extra tariffs of up to 30 per cent on steel imports in March 2002 to aid its ailing steel industry.

    China, which joined the World Trade Organization (WTO) at the end of 2001, removed quotas on steel imports and cut its average steel tariffs by half to 2.5 per cent last year under its WTO obligations.

    Last week, the WTO Appellate Body ruled the US steel tariffs are illegal. The EU has threatened to retaliate if the United States does not lift its steel safeguards swiftly.

    Qi and officials from China's Ministry of Commerce said the US steel safeguards are inconsistent with WTO rules and the United States should cancel them without any delay.

    "China's steel demand will continue to rise in the next several years, boosted by its steady economic growth," Qi said.

    The annual steel demand in China will reach 330 million tons by 2010, up from 210 million tons last year, according to the Chinese steel association.

    Qi said the overall supply and demand in the world steel market will maintain its balance next year.

    He forecast world steel demand will increase by 7 per cent year-on-year to 950 million tons in 2004 as a result of the accelerated pace of the world economic recovery.

    World steel output will reach 1 billion tons next year, up from 950 million tons this year, he said.

    Prices in the domestic and world steel markets will remain on the bullish side next year due to a shortage of production materials, according to Qi.


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