Chinese steel demand is expected to rise by 3.1 percent in 2013, 0.6 percentage points higher than last year as the economy recovers, the country's steel industry association said on Tuesday.
But the China Iron and Steel Association (CISA) said in its regular market report that while demand was set to improve this year, oversupply problems would continue to limit price increases and eat into steel firm earnings.
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CISA said that the recent surge in imported iron ore prices had put steel firms under heavy pressure, with the rise in costs "far exceeding" any increase in domestic steel product prices.
Chinese crude steel output reached a record 716.5 million metric tons in 2012, but the growth rate of 3.1 percent was 5.8 percentage points slower than in the previous year as the slowing economy eroded demand from major downstream sectors such as real estate and automobiles.
A Reuters poll forecast that steel output would rise to 749 million metric tons this year, up 4.5 percent on the year.
(Reporting by David Stanway and Ruby Lian; Editing by Joseph Radford)