Steel consumption rose by 10%.

In 2007, the development of world economy and China's macro business will remain stable although the growth tends to slow down. A survey from China Iron and Steel Association indicated that steel consumptions will continue to rise to a certain degree from sectors such as construction, machinery, auto, shipbuilding, petrol chemical, power, coal, transportation, rail, environmental protection, light industry, home appliance and hardware during the next few years, which will offer an effective room for our steel industry to develop.

The notice said it is entirely possible to realize a growth of 10% for GDP in 2007, 20% or more for fixed assets investment, some 20% for trade value of import and export as well as 10% or so for steel consumption. As a result, China is expected to produce crude steel of about 460 million tons and maintain a stable and growing trend in 2007.

Four reasons to constrain the development of the industry:

1. Restrict from rail transportation still exists in certain regions and times.

2. There were 11 countries adopting 27 anti-dumping and counter-subsidy cases against our steel producers in 2006, led to increased trade frictions.

3. Sales policy and pricing system yet to be established, excessive growth in both new and existing capacity exerts certain influence to the operation of the industry.

4. Prices of raw materials such as iron ore, ferroalloy, imported scrap, coal, electricity, oil and freight rate will continue to rise, and increased cost pressure see no let-out.