It is reported that China's fast economic development continuously has a rising demand for stainless steel and its stainless steel industry has showed a sign of overcapacity with the production capacity overgrowing the demand. Data shows that China's annual demand for stainless steel has maintained a growth around 15% since 1990s making the country the largest stainless steel consumer in the world.

There are three reasons for the continued growth of the demand, according to experts.

1. China's GDP has been growing and the growth of demand for stainless steel is 1.5 times that of GDP

2. Chinese market remains large, with limited market in broad rural area and remote areas having been developed

3. China stays at the middle age of industrialization, the petrochemical and energy industries still in great need of stainless steel.

The booming demand has spurred the growth of the production capacity and output of stainless steel in all countries of the world. With the output ascending, China has become the world's No 1 stainless steel producer.

Market experts said although China has become the world's No.1 stainless steel producer and consumer, the overcapacity issue is looming. Its demand for stainless steel was 6 million tonnes in 2006, while the output was 5 million tonnes. The domestic demand basically equaled to the demand in 2007 and the output was likely to be a little more.

Experts predicted that China's current production capacity has reached 10 million tonnes and if the production capacity is to be thoroughly released, it will greatly surpass the domestic demand. In the past few years, the growth of Chinese demand for stainless steel has been slowed down obviously, from 30% in 2005 to 10% in 2006 and 2007. The growth will stay around 10% in the years to come.