This year China is starting its 11^th Five Year Plan for National Economic and Social Development.  The country plans to restructure its industries and to optimise its resource utilization. Specific to the steel industry, China aims to solve the internal problems of the steel industry such as low industrial concentration, irrational product mix, weak technology innovation, and large volume of low-level production capacity (Xie, 2006).  The world will see whether they can deliver the plan into realization.

The country's steel industry has been growing at unprecedented levels.  The ironmaking capacity is 391 million tons per year in 2005 while the steelmaking capacity is at a staggering 414 million tones per year.  The growing steel business in the period of 2001 – 2005 is presented in the following table.

	2001	2002	2003	2004	2005
Production	157.0	192.5	241.0	319	396.9
Apparent Consumption	169.5	211.5	271.3	334.9	402.2
Import	17.2	24.5	37.2	29.3	25.8
Export	4.7	5.5	7.0	14.2	20.5
Iron ore import	92.3	111.5	148.1	208.1	275.2

       (Wu, 2006)                                                                                 (in million tons)

China's import has been decreasing while on the other hand, export is significantly increased in 2004-2005.  Other important issue for China is the ever-increasing iron ore imports.  Perhaps China will realise that exports are good only if the export high value-added steel because exporting cheap commercial steel does not cover the overall cost of higher imported iron ore price (because higher demand).  Hence, China may reduce exports (or lower the growth) in order to lower production growth and reduce the acceleration of iron ore demand. 

South East Asian steel companies are small and have been feared by an increasing flow of steel (both finished and semi-finished) from China.  Most of the steel products they make are commercial grade and there is no way that the can compete in term of price with the commercial grade steel from China.  The situation is getting more difficult as they have been struggling to compete with imports from Japan and Korea in the high-end segments such as automotive, appliances, and electronics.  Therefore, the region may be safer if China shifts its product mix to the higher grades thus reduces excess of low grade steel.  However, in a longer run, it is still difficult to see the small South East Asian steel producers' viability to survive if they are still unconsolidated.