China's iron and steel industry faces recession

China's iron and steel industry faces recession

A possible growth slowdown is hanging over China's iron and steel industry as surging production costs and banks grudging credit support squeeze steel makers' profitability, said Xu Lejiang, President of Baosteel Group Corporation.

At a recent merger and acquisition forum, Xu said that previously demands-driven growth has fainted out of sight in China and steel producers are resorting to restructuring and acquisition to counter the shrinking domestic demands and volatile global economy.

Steel output in August increased only 1.5 percent year on year while its demands sank six percent as against a 8.9 percent rise in July.

Wu Xichun, consultant of China Iron and Steel Association, predicted that steel output in 2008 might fall below 500 million tons if the market continues to weaken.