Bloomberg quoted an official from the China Iron & Steel Association said strong growth in steel exports from China will be hard to sustain as the global market is oversupplied.

Mr Luo Bingsheng vice chairman of the association said at a conference in Shanghai today said China steel production faces a predicament after a fairly good start in the first four months. Production costs will continue to rise, while the sales prices of steel products have been falling since mid-April.”

He said that “Supply exceeds demand in the global steel market. The strong growth we witnessed in steel exports in the first four months will be hard to sustain.”

Mr Luo said “Apparent global demand for crude steel is expected to grow by 10.7% in 2010, but production jumped 31.8% in first 4 months. Competition will be more intensive.”

According to Beijing Antaike Information Development Co Chinese steel product exports have doubled in the first four months of the year as the global economy recovers. Crude steel output in China rose 27% to a record in April. Benchmark steel prices have dropped from an 18 month high in April.

The World Steel Association said this month that rising production by Chinese steelmakers has spurred competition for the purchase of iron ore, a raw material and driven up contract prices by 90%. Steelmakers have to raise prices to pass on the higher raw material costs

(Sourced from Bloomberg)