Calculated on the basis of the output in the first half year China's crude steel output would exceed 300 million tons this year to reach 332 million, increasing 59 million year on year. An imbalance of production over need has begun to present itself. Steel output in China has already reached 272 million tons in 2004.

Crude steel production saw a year-on-year increase of 28 percent during the first six months, pig iron 33 percent, steel products about 26 percent. These together constituted a fast growth trend in iron and steel production.

Statistics also show that as overall production capacity grows too fast the imbalance of production over need has begun to show since April and was particularly prominent in May, giving rise to overall oversupply.

Officials with China Iron and Steel Association believe despite the overall oversupply in the iron and steel industry the problem of inadequate production capacity coexists with excessive capacity. Structural contradictions still persists and the key is to accelerate adjustment of variety structure.

By People's Daily Online