China Real Estate

Chinese steel industry developed rapidly thanks to the high market demand for steel.

In 2006, the government's macro control, and the adjustment of industry policy produced impact on some enterprises in China's building materials industry. However, the industry still maintained stable growth on the whole, with steady growth in the output and sales revenue. The micro-economic environment and investment environment of the industry looks rosy. Due to low industry concentration, competition is very intense in the industry. The industry structure is not really rational. The excessive production capacity of low-end products coexists with the insufficient production capacity of products with high added value.

In 2006, the government's macro control and adjustment of industry policy produced impact on some metallurgy enterprises in China's metallurgy industry. However, the industry remained prosperous as a whole, with steady growth in output and sales revenue.

In 2004, China produced 272 79 million tons of steel and 252 85 million tons of pig iron with rises of 22.7% and 24.2% respectively last year, and produced 297 23 million tons of rolled steel (recycled steel included), with an increase of 23.29%. According to the calculation, the growth rate of apparent steel consumption dropped from 25.8% in 2003 to 10.71% in 2004. After investigation, we found that the decrease of the steel storage has decreased the rate of actual consumption to around 13%, a 12.8% decrease year-on-year.

The sustainable development strategy for China's cement industry is part of the social sustainable development strategy. China is one of the main markets for the production and consumption of cement in the world. In 2005, China had a cement output of 1.064 billion ton, up 9.69% than 2004. In 2006, the Chinese cement production still stay within its contraction period and is most likely to grow slower than GDP, but is the investment is fixed assent can keep a steady growth, the demand for cement is still able to reach 1.12~1.14 billion ton.

It should also be noted that problems co-exist with the rapid development of China's ferric oxide industry. On one hand, low threshold to ferric oxide industry caused mass production and long-term repeated construction, regardless of market demand; on the other hand, the primary products of China's ferric oxide accounts for a big market share, which means the quality of ferric oxide products is still at middle-low level in international market; moreover, the value added to products is low. Restricted by the requirements of energy, resources and environment, the production of ferric oxide is under higher pressure.

In 2006, the supply of China's ferric oxide was balanced and ample, not excluding shortage or overstock in some areas or within certain manufacturers at a particular period.

In 2005, the production capacity of ferric oxide in China exceeded 700 kiloton, the total output to 622.7 kiloton and export volume to 329.5 kiloton. Ferric oxide products are mainly exported to North America, Europe and Southeast Asian.

Along with the ascending of industrial profit since 2003, glass industry became more attractive, surging up a new-round of investment form 2003 to 2006. Since the construction cycle of glass production line is around one year, newly-added production capacity would emerge between 2004 and 2006.