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China's steel production reported a rapid growth in the first half of this year and is estimated to increase faster in the second half due to robust domestic and international demand.

January-June crude steel output in the nation jumped 18.26 per cent year-on-year to 199.47 million tons, according to data revealed by the China Iron and Steel Association on Friday.

If the production level in June is maintained in the second half, the output will reach 424 million tons in total this year, up 20.45 per cent from 2005, the steel association predicted.

"The growth is too fast, we should be concerned," said Luo Bingsheng, vice-chairman of the association.

Luo said the steel sector's main tasks are still to prevent production capacity overgrowing and speed up elimination of low-level capacity.

Annual steel production capacity in China totalled 414 million tons by the end of last year, according to the steel association. It said extra capacity of 25 million tons would be built this year.

It attributed the surging production this year largely to strong steel demand in the domestic market.

First-half steel demand expanded by 13.25 per cent to 188.41 million tons, according to statistics.

A jump in steel exports thanks to a booming international market also contributed to the fast-growing steel production at home, the steel association said.

China's exports of finished steel products amounted to 17.09 million tons from January to June, up 47.71 per cent from a year ago.

Imports of steel products, however, tumbled by 28.81 per cent to 9.41 million tons.

The association said the sector's profits dropped sharply in the first half due to soaring materials costs, such as iron ore, coal and electricity.

China's top 83 steel makers earned a total of 35.27 billion yuan (US$4.41 billion) in the period, down 30.36 per cent year-on-year.

(China Daily July 29, 2006)