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Baosteel Group Forecasts Moderate Increase in China Steel Demand

Baosteel Group Corp., the parent of China’s biggest listed steelmaker, expects a moderate increase in steel demand this year, General Manager He Wenbo said.

“The steel industry hit a trough last year,” He, who’s also chairman of unit Baoshan Iron & Steel Co., said today in an interview during the National People’s Congress in Beijing. “This year would be better, although we don’t expect” a large increase in demand, he said.

Premier Wen Jiabao maintained an economic growth target of 7.5 percent for this year as he delivered his final annual work report today to the legislature. Li Keqiang, set to become China’s next premier, highlighted plans in his first policy statement in November to build rail, road and sewage systems to support an urban population that exceeded rural residents for the first time in 2011.

Demand may be hurt after China’s cabinet on March 1 introduced measures to tame home prices, including a 20 percent tax on individuals selling properties, “but if you look over a long term, the urbanization process will support steel demand positively,” He said.

Shanghai-based Baosteel Group may earn more than 10 billion yuan ($1.6 billion) in profit this year, he said, without specifying if the number is before or after tax. The company won’t add new capacity in Shanghai and is moving some plants out of the city to comply with environmental norms, He said.

Baoshan Iron & Steel said Jan. 9 its net income probably rose 40 percent to 10.3 billion yuan in 2012, boosted by a one-time gain from asset sales, according to preliminary earnings sent to the Shanghai Stock Exchange. Profit may be lower at the listed company this year, He said.

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