China saw a plunge in steel imports and a jump in exports during the first three quarters of this year, but an industry organization said the nation would continue to be a net steel importer in coming years.

The nation's steel product imports stood at 23.93 million tons during the period, down 15.17 per cent or 4.28 million tons from a year earlier, statistics from the China Iron and Steel Association showed.

Qi Xiangdong, deputy secretary-general of the association, predicted that China's full-year steel product imports would amount to 30 million tons, down from the record high of 37.17 million tons last year.

The nation's steel product exports grew by 67.09 per cent, or 3.47 million tons, year-on-year to 8.63 million tons in the first nine months of this year, according to statistics.

Qi said that full-year steel product exports will reach 10 million to 11 million tons, up from 6.96 million tons last year.

The nation also imported 3.64 million tons and exported 2.83 million tons of steel billets from January to September this year, down 11.24 per cent and up 121.56 per cent respectively from the same period of last year.

"The plunge in steel product imports and robust growth in exports were mainly the result of higher international steel prices rather than in the domestic market," said Luo Bingsheng, vice-president of the association.

International steel prices are now higher by 30 per cent on average than in the domestic market, according to Luo.

"Many foreign countries, such as India, Ukraine and Russia who targetted the Chinese market in the last few years, have turned to the United States and Western Europe where steel demand is booming thanks to the economic recovery," he said.

He also attributed the import tumble and export increase to improving competitiveness of Chinese steel makers' products, especially big names like Baosteel.

"Our own steel products have fended off more imports of products which we were unable to make in the past," he said.

However, Luo stressed that China's steel imports would continue to be greater than exports in the next few years while growth of the domestic steel industry would not "pose a threat to others in the short term as some are worrying."

"Our steel industry will continue to mainly depend on the domestic market since steel demand in China will continue to grow steadily with the nation in the industrialization process," he said.

China's steel output reached 192.15 million tons during the first three quarters of this year, up 21.6 per cent from a year ago, according to statistics.

Steel demand in the nation rose by 16.22 per cent to 229.21 million tons during the period.

The association forecast that total steel output and demand would stand at around 260 million and 276 million tons this year, respectively.

"The State's macro controls on overheating investment in the steel sector have achieved initial results, but we should keep vigilant to prevent a repeat since some small steel plant which were shut down have resumed production," Luo said.

Fixed asset investment in the steel sector amounted to 135.3 billion yuan (US$16.3 billion) in the first nine months of this year, up 40.4 per cent from a year earlier, statistics indicated.

The growth rate was down from 107.2 per cent in the first quarter of this year but up from 27.8 per cent in the second quarter.

Major steel makers in China reported sharp growth in profits during the first three quarters as a result of strong sales and bullish steel prices.

Profits of China's 65 largest steel companies, which account for nine-tenths of total steel output in the nation, surged by 63.9 per cent year-on-year to 56.71 billion yuan (US$6.85 billion) during the period.

Profits of 11 of these firms exceeded 1 billion yuan (US$120.7 million) each in the period, and Baosteel, China's No 1 steel maker, earned 16 billion yuan (US$1.9 billion).

The 65 companies' full-year profits will reach a record high of more than 75 billion yuan (US$9.1 billion), the association predicted.

However, domestic steel makers still face difficulties from an insufficient supply of iron ore, coking coal, power, and transportation capacity.

In the first three quarters, the nation imported 151.1 million tons of iron ore, up 36.6 per cent from the same period last year.

The association predicted that total iron ore imports this year would exceed 180 million tons, up from 148.1 million tons in 2003.

(China Daily October 29, 2004)