China's steel exports dropped 5.5 percent year-on-year in 2008 after consistent growth for about a decade, the General Administration of Customs said yesterday, warning of further challenges to the industry this year.

The country's steel exports dipped to 59.23 million tons last year, while the export value increased 43.8 percent year-on-year to US$63.44 billion, Customs said on its website.

Steel exports dropped 40 percent year-on-year to 1.91 million tons in January and the import of iron ore reached 32.65 million tons, down 5 percent from December 2008.

Monthly steel export declined sharply after reaching a peak of 7.68 million tons in August. The figure stood at 2.95 million tons in November, the lowest since 2007, and picked up slightly to 3.17 million tons in December.

Customs warned that prospects for the sector remain gloomy this year.

The number of new orders is expected to decline because global demand is likely to shrink by over 10 percent this year as estimated by foreign research organizations.

Among China's major markets, demand in South Korea is estimated to drop by 9.5 percent from a year ago, with the United States down by 11 percent and Japan down by over 30 percent.

Affected by the trend, China's steel export orders declined sharply since the fourth quarter last year.

Customs also warned that trade conflicts against Made-in-China steel products may increase this year because some trade partners intend to protect their steel industries from the global economic downturn. Some countries are launching more anti-dumping and countervailing cases against Chinese steel products while others are increasing import duties.

The appreciation of the RMB also weakens the competitiveness of Chinese products, it said.

(China Daily February 12, 2009)