Though China's steel production and consumption increased rapidly in the past two years, experts say that China's steel consumption will not reach its peak until 2010.

"To judge whether or not a country reached the peak steel of consumption, one should consider the certain country's industrialization level," said Li Shijun, deputy secretary-general of the China Iron and Steel Association (CISA), at a recent forum on the steel industry here.

Li noted that China is still in the development stage of industrialization. Since 2002, China has entered a new round of rapid economic development, which will bring the consumption of steel to a higher level.

By 2005, the country will need 250 million tons of steel and the figure is expected to reach 310 million tons by 2010, said Li.

Experts noted the judgment on China's steel consumption trend in the next years is of importance for the long-term policy making in the sector.

Since 2001, China's consumption of steel has increased by 30 million tons annually to reach 250 million tons in 2003, keeping the No. 1 position in the world, surpassing the combined sum of those in the United States and Japan. The International Steel and Iron Association predicted that in 2004, China will consume 31 percent of the world's total.

In the meantime, the country produced 210 million tons of steelin 2003, up 15.38 percent from in 2002.

Li said that in other countries which have finished the industrialization process, like the United States, Japan and England, the steel consumption reached the peak usually when the urbanization rates reach 65 percent or above.

China's urbanization rate was at 37.7 percent in 2001.

Though China's steel consumption will continue to grow in the next years, experts warned against the overheating and repetition of construction in the sector.

Since 2002, as investment keeps pouring in, a number of new steel production projects are being built. Industrial experts warnthat the steel sector is becoming overheated, noting that risks are accumulating in both raw material supply and the sale of finished products.

The Chinese government has been aware of the risks and started to draft policies to rectify irrational investments in the sector,said Wang Jiong, general manager of Wuhan Iron and Steel Company in central China's Hubei Province.

The remedy is expected to focus on land and credit management. Besides, the coming policies seem sure to tighten market access inthe steel industry. New projects must meet requirements in the capacity of blast furnaces, auxiliary facilities, energy consumption, water consumption, and pollution discharge.

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