October 19, 2010 / 3:49 AM / 9 years ago

China steel demand growth to slow from next yr -Citi

SHANGHAI, Oct 19 (Reuters) - Chinese steel demand growth will slow to a single-digit percentage rate starting from next year, Citi Investment Research & Analysis said in a report, citing a senior industry official.

As the world’s largest steel supplier, China’s steel sector will post average annual output increases of 20-30 million tonnes for the next five years, Zhou Guocheng predicted at a Beijing conference.

Zhou was former deputy secretary general of the China Iron & Steel Association, comprising 77 medium and large steel mills.

By the end of 2015, China is expected to be able to roll out 730 million tonnes of crude steel, while its demand growth will slow from a double-digit percent rate to mid-single digits from the beginning of the 12th five-year plan.

China, the world’s biggest iron ore consumer, will see falling iron ore import volumes or prices in 2011, helped by rising domestic ore production but lower steel output growth.

According to Zhou’s remarks, Chinese domestic ore production will further squeeze the volume of imported ore, which will put pressure on international ore prices.

Domestic iron ore production should rise another 20-30 percent next year, but steel output may only grow 5-7 percent, he said.

Earlier, the China Iron & Steel Association estimated that Chinese domestic iron ore production would rise about 20 percent this year to more than 1.1 billion tonnes. [ID:nBJI002388]

Output in the first eight months of 2010 was 685.7 million tonnes, a 28 percent rise from the same period of 2009.

Zhou predicted that the export rebate for cold-rolled coils, which is currently 13 percent, should be removed sooner or later as Beijing seeks to produce steel for domestic use and reduce exports.

China is likely to shut more blast furnaces of 400 cubic meters capacity or below over the next five years, while the power-cut policy to curb steel production and save energy will not likely continue into next year, he said.

Market sources said a few steel mills in northern China’s Hebei province have already resumed production after the government ordered curbs in September.

Reporting by Ruby Lian and Tom Miles; Editing by Ken Wills

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