Steel product prices on the Chinese market may fall in the second half of 2007, industry insiders predicted in a conference recently.

Overcapacity and trade disputes will force steel product prices down in domestic market, experts said at the 2007 Steel Market and Trade Conference held in Guangzhou, capital of south China's Guangdong province.

"Supply and demand in the domestic market maintained a subtle balance last year," deputy general manager Jia Liangqun of Mysteel, a steel information website, explained.

The country's crude steel output surged by 18 percent annually to 419 million tons in 2006 and was expected to reach 475 million tons or even higher in 2007, according to official data.

China's apparent consumption of crude steel amounted to 384.05 million tons last year, while domestically-made steel products accounted for a record 95.82 percent of China's steel market last year.

"We can expect a price decline in China if exports are limited,” Jia said. "Supply far exceeds domestic demand, which is too high to speed up any further."

China exported more than 43 million tons of steel products in 2006, an increase of 109.58 percent from the previous year, making it one of the world's major exporters.

Shortages of steel products on the international market were likely to come to an end in the second half of this year, warned Peter Marcus, managing partner of World Steel Dynamics.

Meanwhile, overseas markets are under pressure to limit China's steel exports.

"We hope China can limit its exports to Europe from five million tons in 2006 to two million tons in 2007," said Gordon Moffat, a director of Eurofer, a European steel-makers association.

The fast increase in iron and steel exports triggered trade disputes with China's trade partners. Altogether 11 countries had launched 27 anti-dumping and anti-subsidy investigations against China in 2006, mainly involving the United States and the European Union, the main export markets.

According to Zhang Guobao, Vice Minister of the National Development and Reform Commission, the Chinese government would formulate a policy to cut the rate of export rebates for some steel products to curb exports.

"Steel product prices will remain stable," Luo Bingsheng, vice-chairman of the China Iron and Steel Association, said. "We will coordinate our members if there are extreme fluctuations."

(Xinhua News Agency March 29, 2007)