(Xinhua)
Updated: 2008-03-06 21:15

BEIJING -- Growth in China's steel output will slow sharply in 2008, despite the country remaining a top producer and net seller of the strategic products, China Iron and Steel Association (CISA) officials said here on Wednesday.

Output of crude steel was expected to grow between 6.3 and 10.4 percent year on year, while rolled steel output was forecast to increase by 7 to 12.3 percent, said Qi Xiangdong, CISA director, at a steel products export forum.

By comparison, the outputs of crude and rolled steel increased by 15.66 percent and 22.69 percent, respectively, in 2007, according to CISA figures.

Qi attributed the main reason for the slowdown to the rising price of iron ore in the global and domestic markets.

Since China joined international pricing negotiations in 2004, the price has risen every year. Price negotiations for 2004 ended with an 18.62 percent increase, followed by a 71.5 percent rise in 2005 and a 19 percent increase in 2006.

Baosteel Group, the country's largest steel maker, agreed last month to raise steel prices for the second quarter of 2008, accepting the Brazilian miner's price rise that ranged from 65 to 71 percent compared with 2007.

According to Qi, the snow disaster that started in late January and caused severe strains in power supply and transport should be partly responsible for the slowdown.

"Steel output was greatly affected on the shortage of electrical power, coal coke and iron ore -- major resources for steel production." He added insufficient steel production capacity also led to output slowdown.

In a bid to protect the environment and achieve energy-saving goals, China eliminated 29.4 million tons of outdated iron smelting capacity and 15.21 million tons of outdated steel smelting capacity by the end of November.

A total of 344 iron and steel makers in 10 provinces, autonomous regions and municipalities, including Beijing, Hebei, Shanxi, Henan, Jiangsu, Shandong, Zhejiang, Jiangxi and Xinjiang, were closed, according to National Development and Reform Commission (NDRC).

"On one hand, the outdated production capacity has been eliminated. On the other hand, the newly-developed capacity has not been fully put into use, leaving a temporary gap between demand and supply," Qi said.

He estimated that exports of China's rolled steel may plunge 17 percent year on year amid a looming trade protective sentiment on the international market.

Last year, the country exported 62.65 million tons of rolled steel, a growth of 45.8 percent over the previous year. The growth rate, however, was 63.7 percentage points lower than the year-earlier level.