China's net exports of ferroalloys will maintain at around 10% of the country's total production to reach at around 1.5-1.7 million mt/year in the next few years, said Xie Xinmin, consultant and former chairman of China Ferroalloys Industry Association, adding that the export growth from the country, however, had been on the downtrend.

Speaking at the Metal Bulletin 8th Asian Ferroalloys Conference in Hong Kong on Tuesday, Xie said China's ferroalloy export growth had slowed due to growing consumption in the local market. "Strong domestic demand reduces the proportion of the country's ferroalloys exports...China's proportion of net exports declined from 27.07% in 1998 to 12.85% in 2005 and 12.17% in 2006," he added.

Xie also pointed out that continued steel development in China played a key role in supporting the growth of the ferroalloys. "China's crude steel production will maintain at around 450-500 million mt/year, leading to a ferroalloy consumption of 11-12 million mt/year," Xie said. China produced 14.33 million mt of ferroalloys in 2006, with about 2.36 million mt were for exports to the global market, he added.
Industry faces overcapacity, low operation rate and backward facilities

Xie, however, noted that the Chinese ferroalloys industry continued to face concerns over serious overcapacity, low operation rate and backward production facilities. "Many ferroalloys plants in China are sparsely located in different areas and it takes extra time and efforts to regulate the sector," he said.

He added: "Among a total of about 1,530 ferroalloys producers in China, only about 25 of them have an output capacity at above 100,000 mt/year." He added that 75 of total ferroalloys producers were at 30,000-100,000 mt/year, 200 at 10,000-30,000 mt/year while the majority of producers of about 1,200 are with output capacity at below 10,000 mt/year. "The ferroalloys industry in China is still facing the problems of overcapacity, power shortage, environmental concerns, and financing."

Chen Renhua,, deputy general manager, Baoshan Iron & Steel Co., Ltd echoed the view and added: "The iron and steel industry in China stimulates both ferroalloy production and consumption in the country...but China is still seeing more supply than demand." Ren added that the competitiveness of the country's ferroalloy industry could enhance through mergers and acquisitions, technology innovation, reduced exports through export tax imposition and tightening environmental protection policies.

He added that in 2007, doemstic consumption of ferroalloys was estimated at about 11 million mt, accounting for 50% of the total production capacity.