China would produce 25 percent more steel this year than in 2004 but growth should slow next year, the president of the country's largest steel mill said Friday.

"This year's output could be 340 million tons. The steel sector's output has grown by 20 percent annually for four years. I don't think it will grow by that much next year," said Xu Lejiang, president of Baosteel Group.

In 2004, China, which gobbles up a quarter of the world's steel, churned out 273 million tons of steel, according to official data.

Steel output in China, the world's largest producer of the metal, had already risen 28 per-cent in the first eight months of 2005 to nearly 225 million tons.

Baosteel Group is expected to sell 120 billion yuan (US$14.9 billion) of steel this year, while its steel capacity will rise to 23 million tons by year end.

The parent of Shanghai-listed firm Baoshan Iron & Steel Co., Baosteel Group is slated to be one of two firms with capacity of 30 million tons, as envisioned in China's blueprint for consolidating the steel sector.

The other will be Anben Iron & Steel Group, the giant formed by the August merger of the parents of Angang New Steel Co. and Ben-gang Steel Plates Co., formerly China's second and fifth-largest steel mills.

"China's steel industry is very fragmented. But the upstream iron ore sector has a high degree of concentration, and so do some down-stream industries, like automobiles," Xu said, when asked how the Anben merger would affect Baosteel.

"So there's room for more than one company like Baosteel."

But Baosteel has yet to get the green light for its newest project, a 10 million ton steel plant it hopes to build from scratch in Guangdong Province.

"We have requested approval for this project. But the Central Government is very restrictive on new projects this year, so they haven't come back to us yet," Xu said.

(Shenzhen Daily September 19, 2005)