China’s iron and steel sector has been facing severe challenges in the first quarter of 2012 as the sluggish demand and high raw material cost has continued weighing on the industry’s profitability since the beginning of this year.

Production in Q1 has continued to grow and remains at a high level, but the rate of growth slowed to 6.2% compared with the 8.7% growth in the same period last year.

Crude steel production amounted to 174.22Mt in the January-March period, up 2.5% from a year earlier.

Exports of steel products rose robustly in the first quarter, while imports fell. Prices of steel products also remained low in the period, with sheet products out-performing long products.

Output of pig iron totalled 165.92Mt in Q1 2012, up 3.2% on the year earlier, and output of finished steel products also gained 6.5% on the year to 222.46Mt.

Daily crude steel output averaged 1.9145Mt in Q1 indicating output for the full year may reach 699Mt.

Exports in the January-March period amounted to 12.15Mt, up 15.8% from a year earlier. In March alone, exports of steel products stood at 5.03Mt, 1.64Mt more than the previous month. Imports of steel products in the same period decreased 18.4% on year to 3.41Mt. Net exports of 9.19Mt for semi products in Q1 was 40.95% more than a year ago.

Iron ore imports in Q1 reached 187.62Mt, up 6% on year.