20000410

China steelmakers eye boost from hinterland buildup

BEIJING: China's ambitious plan to develop laggard western and interior provinces will be a boon to the nation's steel industry, the China Daily Business Weekly said on Sunday.

The official newspaper quoted industry sources as predicting demand for glutted steel products would soar as hinterland provinces build railroads, power stations, electricity grids and oil fields.

Demand for steel this year in the western regions targeted under a government spending scheme would reach 20 million tonnes, 20 percent higher than in 1999, it said.

China's five-year plan covering 2001-2005 would pour more than 300 billion yuan ($36.23 billion) into railway and road projects in the western region, the newspaper said.

Construction of a 4,200-km natural gas pipeline set to begin next year to link gas fields in remote Xinjiang to Shanghai on the eastern seaboard would require more than two million tonnes of steel, it said.

The daily quoted Wang Xiaoqi, an official of the State Administration of Metallurgical Industry, as saying annual demand for steel products in the western regions would reach 25 million tonnes by 2005, 16.5 percent of national demand.

The expected windfall for the ailing sector comes as China is enforcing measures to cut steel output by 10 percent this year to bolster prices and profits.

Analysts have predicted the government plan to develop western areas that have fallen behind the rapidly growing eastern coastal regions will generate strong demand for a wide range of metals. -Reuters