Overgrowth of China Steel Industry to Slow Down in 2006, Mr. Bada

Hajime Bada, chairman of Japan Iron and Steel Federation and president of JFE Steel Corporation, showed his vision at monthly press conference on Tuesday that Japanese economic boom would maintain for a while with 2.3-2.4% of current annual growth. He said that the growth rate is lower than average 11% in 1965-1970 but that the sustainability is important rather than growth rate. He pointed out Japanese manufacturing industries are very active mainly for export and construction despite of negative factors such as downturn in U.S. economy and the increase of interest rates or yen rate in Japan.Mr. Bada said that Chinese domestic steel supply expands more rapidly than the demand and that Chinese net export of steel products would become to 20 million tonnes through 2006. He pointed out U.S. government might take safeguard or anti-damping measure when steel inventory is increasing in the country due to Chinese steel export. On the other hand, he also pointed out Chinese government had taken export restrict measures such as tax rebate reduction for steel products or export custom duty raise for pig iron, semi-finished steel products and ferroalloy. He said capital investment by Chinese steel industry is likely to decrease slightly in 2006 from 2005. He concluded steel output expansion would slow down in China and the export would decrease.Mr. Bada also referred to mergers and acquisition (M&A) by overseas enterprises against Japanese steel makers. He commented M&A might damage Japanese manufacturing industries to lose its efficient cooperation among steel makers, component makers and assembly makers. He warned Japanese government should organize original legal system on M&A and triangular merger.