On 13th June, Hebei Dongshan Metallurgy Industry Company Ltd held a ceremony for phase one of 1.00 million tons I beams, angle and channel steel rolling project breaking ground, which means the project launched construction virtually.
The investment for the 1.00 million tons I beams, angle and channel steel rolling project totals 200 million Yuan, with phase one having a time limit of six months, and an investment of 100 million Yuan. The investment recovery period is 18 months. Phase two is to begin in early 2009. When the project completed, the company will have an iron capacity of 1.00 million tons per year, and an equaling capacity for steel and steel products respectively.

A weakening dollar has contributed to China’s inflationary pressure by pushing up commodity prices around the world, said the country’s central bank governor.
Chinese policymakers need to learn from the lessons of U.S. subprime woes, said Zhou Xiaochuan, governor of the People’s Bank of China, also a member of the Chinese delegation attending the two-day session of the Sino-US Strategic Economic Dialogue (SED) in Maryland.
The dialogue, headed by the U.S. Treasury Secretary Henry Paulson and Chinese Vice-Premier Wang Qishan, ended yesterday.
“Emerging economies are feeling the pinch (of rising prices),” he said at a news briefing in Annapolis, Maryland. “A weakening dollar may push up prices of commodities such as crude oil,” which are major imports of China, he said.
The price of crude oil has on one occasion topped 135 dollars a barrel in recent trading sessions.
Raw-material prices have also been hovering at high levels since last year, putting pressure on China’s factory-gate prices, which would in turn pass onto the consumer inflation zone.
In May, China’s producer price index, which gauges factory-gate prices, rose 8.2 percent, the highest in more than three years, feeding concerns that although consumer inflation eased to 7.7 percent in May, down from 8.5 percent the previous month, it may rebound in the coming months.
The central bank yesterday set the mid-point of the yuan’s exchange rate at 6.8823 against the dollar, marking a new historical high since China revalued the yuan by 2.1 percent to 8.11 per dollar in July, 2005. It has appreciated a further 17.84 percent since then.
The yuan has regained momentum of fast appreciation while it is strengthening in the non-deliverable forwards market.
Analysts said the yuan’s strengthening would reduce pressure on China’s “imported inflation”, or inflation incurred by imports, but the effect has proved to be limited. Worse, it has started to push some domestic export-oriented enterprises to the wall.
The appreciation momentum of the yuan may not slow until the Olympic Games in August, said Liu Dongliang, currency analyst of the Shenzhen-based China Merchants Bank. “The post-Olympic trend is not clear yet.”
Zhou also said China will learn from the U.S. financial woes triggered by its subprime problems.
Sovereign wealth fund
Finance Minister Xie Xuren, who was also attending the SED session, said the country’s overseas investment through its 200 billion dollar sovereign wealth fund does not pose a threat to financial markets.
Xie said that the fund is not aimed at short-term speculation but long-term investments that should help the overall economy.
As the U.S. financial market is bogged down by the subprime crisis, the capital injection from investment by the world’s major sovereign wealth funds has helped stabilize the market, but some U.S. politicians fear that such investment will pose a threat to U.S. financial security.

China’s top economic planner announced Thursday night the country will raise the prices of gasoline, diesel oil, aviation kerosene and electricity, revealing an unprecedented broad plan to raise energy prices.
Beginning Friday, the benchmark gasoline and diesel oil retail prices will be marked up by 1,000 yuan (144.9 U.S. dollars) per tonne, with the price of aviation kerosene up by 1,500 yuan per tonne.
The prices of natural gas and liquefied petroleum gas, however, would be left unchanged, according to the National Development and Reform Commission (NDRC).
The benchmark retail prices of gasoline and diesel oil would be lifted to 6,980 yuan and 6,520 yuan per tonne, up more than 16 percent and 18 percent respectively.
The price rises also translate into mark-ups of 0.8 yuan and 0.92 yuan per liter, the measurement used at service stations in China, for gasoline and diesel oil respectively.
The commission said the oil price adjustment was made to ensure supplies in the country by diminishing the gap between continuously rising international crude prices, especially since February, and state-set domestic oil prices.
Crude oil price on the international market reached above 136 U.S. dollars per barrel on Wednesday, up more than 45 percent from the price when the country raised oil prices in November last year.
The government-controlled oil prices on domestic market should be blamed for a shortfall of supplies, as some refineries stopped or cut back on processing to avoid losses, said an unidentified NDRC official.
The commission said more subsidies would be offered to farmers, public transport, low-income families and taxi drivers to cushion the crunch of price rises.
For instance, farmers would get five yuan per mu (1/15 hectare)of farmland in extra subsidy; low-income families in cities would get an extra 15 yuan for each person every month starting from July, 10 yuan for such rural families.
The commission said fares for passenger travel by rail, urban and rural public transport and taxis would remain unchanged after the rise.
The official did not comment on the impact of oil price rises on the inflation rate, which eased to 7.7 percent in May. In April, it rose 8.5 percent after a 12-year high of 8.7 percent in February.
The commission also said the average electricity tariff will be raised by 2.5 cents per kwh starting from July 1, up 4.7 percent on average.
It said the price rise was made in response to rising costs of the country’s power plants, including rising power-coal prices, increased costs on desulphuration facilities and investment in grid upgrading.
More than 80 percent of all the power generation companies suffered losses in the January-May period due to power-coal price rises.
Official statistics showed that power coal prices went up by more than 80 yuan per tonne in the past two years. The prices had gone up by 60 yuan since the beginning of the year.
The commission also announced the country would exercise temporary price intervention on power coal as of Dec. 31, and power coal prices are capped below the price on June 19.
The policy was adopted as the commission expected the power-coal price to rise further because of the gap between domestic and international prices and tight supplies.
The commission also said urban and rural residents and sectors of farming and fertilizer production, as well as the quake-hit provinces of Sichuan, Shaanxi and Gansu, will be exempt from the price rise.
Industrial and commercial undertakings, however, would only see limited impact, as power expenses usually account for a small portion of their total costs, it said.
“The price rise in electricity would not have a fundamental impact on the country’s inflation rate,” said the NDRC official.

World crude steel production for the 66 countries reporting to the International Iron and Steel Institute was 119.5 million tonnes in May 2008. This is 5.8% higher than the same month last year.

China produced 46 million tonnes of crude steel in May 2008. This is an increase of 10.5% compared to the same month in 2007. India, Japan and Korea also showed growth. Overall, Asia produced 67.6 million tons of crude steel in May 2008 as compared to 62.4 million tonnes in May 2007, an 8.3% increase in crude steel production.

In Europe, Germany produced 4.1 million tonnes of crude steel in May, an increase of 2.6% compared to May 2007. Turkish crude steel production was 2.5 million tonnes, a 12% increase compared to the same month last year. Over the first five months of 2008, Turkey produced 11.7 million tons of crude steel, which is 9% more than the same period in 2007.

Brazil’s crude steel production also grew in this month. In May 2008, Brazil produced 3 million tonnes as compared to 2.9 million tonnes in the same month last year, an increase of 2.8%.