China’s steel production is set to expand by up to 25 per cent over the next five years, allaying fears of a drop in demand for iron ore despite a 0.76% drop in China’s steel industry profits, according to a report in The Australian.

 

The drop in industry profits is partly due to an increase in ore prices as a result of a strong Australian dollar.

 

The China Iron and Steel Association (CISA) has forecast output  of up to 750 million tonnes by 2015, up from an output of 612 million tonnes in 2010.

 

The figures released by the CISA are based on China’s five-year plan, which has outlined expected rates of economic growth between 8% and 9%.

 

China, which produces 46 per cent of the world’s steel, is due to import 80 million tonnes of iron ore from Australian this year.

 

Australia’s minerals sector is set to benefit from a ban of iron ore exports in India, with Brazil and Australia set to pick up the slack in China’s ore import.

 

"There are railways, airports and a new commitment to low-cost housing. We estimate steel production might reach 750 million to 780 million tonnes by 2015, with a 20 million to 30 million-tonne annual increase, and iron ore imports will be about 820 million tonnes by 2015," Umetal.com analyst Xu Guangjian told The Australian.