China's economy grew by more than 9 percent last year, defying predictions that such a pace could not be maintained. Its steel consumption is soaring, and is estimated to have increased by close to 25 percent in 2003. Moreover, imports reached more than 30 million tonnes of finished steel products, and large volumes of semi-finished.

MEPS latest issue of World Steel Outlook indicates that in 2003 China was already in surplus in three types of carbon steel products: wire rod, merchant bars and reinforcing bars. These represent half of the country's consumption.

China's light long product mills increased their output substantially last year. Shipments of rod and bar from domestic mills rose by an estimated 12 million tonnes. Total bar/rod output exceeded apparent domestic consumption by about 1 million tonnes.

Plate self-sufficiency is in reach. China was within 1 million tonnes of supplying all its own needs in 2002. But last year's sharp growth in apparent consumption left the country requiring over 3 million tonnes of imports to supplement its shipments of domestically produced material.

These trends have important implications for the world market. China's requirement to import construction steel may start tapering off, especially as building projects related to the 2008 Olympic games come to completion. The country is already a net exporter of bars and rods and the volumes are rising.

Various government authorities have been striving - with increasing desperation - to have new investment in steel directed away from products in which there is a real possibility of over-supply. They would rather see more of the industry's capital expenditure going into the categories which China still has a structural deficit- principally sheets, coated and uncoated.

China is nowhere near self-sufficiency in sheets. Our estimates for 2003 put the gap between domestic mill shipments and apparent consumption at almost 9 million tonnes for hot rolled coil, 10 million tonnes for cold rolled coil and more than 7 million tonnes for zinc-coated sheet.

There will continue to be a massive import requirement for strip products in the years to come. This would certainly grow if Chinese domestic production is constrained by a shortage of raw materials such as iron ore, or by a scarcity of ships to transport the blastfurnace feed from Austalia and Brazil.