CHINA'S annual crude steel consumption is set to reach 750 million tons by 2015 as urbanization and industrialization boost demand, according to a five-year plan worked out by the industry ministry.

And annual consumption could peak at 770-820 million tons from 2015-2020, according to the plan published on the Ministry of Industry and Information Technology's website yesterday.

After that, China's steel demand growth will slow down year by year and enter a steady period along with slower growth in infrastructure investment, the plan estimated.

China, the world's largest steel producer, is phasing out excess capacity and focusing on efficiency, quality and profitability in the industry. High raw material costs and oversupply have depressed profit margins for the industry.

The nation produced 627 million tons of crude steel last year while capacity stood at 768 million tons at the end of 2010. Output is expected to hit 700 million tons this year.

As part of the five-year plan, China also projects to have its top 10 steel groups account for about 60 percent of the nation's total steel output, up from 48.6 percent in 2010, by encouraging mergers and acquisitions and eliminating obsolete steel mills.

By 2015, Baosteel's mega steel project in Zhanjiang, south China's Guangdong Province, and Wuhan Steel's plant in Fangchenggang, the Guangxi Zhuang Autonomous Region, also in south China, will have been established.

Major steel firms should invest at least 1.5 percent of their core business revenue in research and development, up from 1.1 percent last year, the industry plan said.

Mills in developed nations use about 3 percent of their revenue in R&D, it added.

Source:Shanghaidaily