Production of finished steel in China is forecast to reach approximately 700Mt in 2011, according to China Steel Insight, a new report from MEPS.

This represents an increase of 8.1% on the year earlier figure. The vice president of the China Iron and Steel Association, Zang Changfu, confirmed the low profitability of domestic mills as rising raw material costs ate into margins.

The opportunities for strong levels of steel mill activity, this year, were highlighted when the China Banking Regulatory Commission (CBRC) indicated that tougher lending rules would not be introduced until early 2012.

In its latest report, MEPS comments that sufficient iron ore should be available in the global markets to meet the predicted increase in Chinese demand.

Moreover, the mills in China have been able to avoid much of the rising cost of imported coking coal by increasing the use of domestic material – particularly for the manufacture of steels for the construction sector.

These represent near to 55% of the total output.

Source: New MEPS Report China Steel Insight Web