Steel expansion era close to end

In the first half of this year, China produced 323 million tons of crude steel, accounting for 72 percent of Asia's total steel output and 46 percent of world totals. The heady level of steel output certainly leads to growth in the consumption of iron ore. Under such circumstances, how could China be able to persuade foreign iron ore suppliers to lower their prices while demonstrating its voracious demand for the non-renewable fossil resources?

However, a staggering five-fold-odd rise in steel output (from 100 million tons in 2000 to an estimated 650 million tons in 2010) over the past decade seems to have indicated an end of era for the booming steel sector. China's steel industry is getting close to its output peak. The ceiling of its marginal profit first emerged as early as late 2007, and the profit level has since been falling.

This round of long-term industry boom was predominately stimulated by the rough-edged, extensional economic development mode that not only focused on gross output expansion, but depended heavily on resources-intensive sectors, often high energy consuming and polluting, and cheap labor force.

But this kind of traditional development pattern is eventually being replaced by novel guidelines featuring economic transformation, industry updating, and rural and urban integration. This has required the steel industry to make corresponding changes, further enhance the degree of concentration, eliminate outdated and superfluous capacity, reinforce development of new products, and step up environmental disciplines.