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China's steel output growth to slow

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SHANGHAI - China's steel output growth will slow down to an average annual expansion of 6 percent over the next five years amid the country's efforts to restructure its economy, Li Shijun, chief analyst for the China Iron and Steel Association (CISA), said on Saturday.

Li told attendees at a meeting in Shanghai on the steel industry's development strategies that the peak for the annual output of China's steel industry in the next five years would likely be around 850 million tons.

According to CISA's statistics, China's crude steel output reached a new high of 627 million tonnes in 2010 after the industry's average annual growth rate slowed to 12 percent during the 11th Five-Year Plan period from 2006 to 2010, compared to 22.6 percent from 2001 to 2005.

The steel industry's profit margin, however, fell to less than 3 percent from over 8 percent in the 2001-2005 period, ranking lowest among all industries.

Li said that low margins would prompt Chinese steel manufacturers to cut their output and raise their profit levels.

"Steel consumption will be restricted in the next five years as China moves to reduce its reliance on investment and exports and depend more on consumption to drive the economy," Li said.

A study by the People's University of China showed that construction and steel industries were the top two investment-driven sectors in China.

Of China's 9.7 percent economic growth during the first quarter of 2011, consumption contributed to about 60.3 percent of gross domestic product (GDP) growth and investment accounted for 44.1 percent, while the contribution from exports totaled negative 4.4 percent, according to the National Bureau of Statistics.

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