China's crude steel output increased by 68.876 million tons to reach 349 million tons in 2005. But the year also features great rise and fall of steel price and the contradiction between excessive supply and limited demands.

According to Luo Bingsheng, vice president of China Iron and Steel Association (CISA), at present China's iron and steel production is obviously driven by market. The market's demand for iron and steel is growing steadily. Yet the steel price experienced major decline in 2005 due to surplus supply, which results in negative increase in enterprises' profit.

Luo said the industry would present following characteristics in 2006:

The demand at iron and steel market will shift from high-speed increase to appropriate and relatively fast increase.

The competition between domestic iron and steel enterprises and their overseas counterparts will intensify.

The contradiction between newly added production capability and decreased growth rate of demands will continue to exist.

Restructuring of iron and steel enterprises needs to be quickened in order to readjust the layout of iron and steel industry, rationally allocating resources and eliminating chaotic competitions.

China will further step up efforts in building an environmental friendly and energy saving society. That will also affect the iron and steel industry.

Talks on iron ore price that started in last November will formally begin in February.

By People's Daily Online