Growth in Chinese steel production is expected to ease to 16% this year after surging 21.2% in 2002.
Analysts expect production growth to pick up again next year, when many production facilities will come on stream.
Together with rising energy, raw materials and transportation costs and an anticipated slowdown in GDP growth from last year's 9.1%, the risk of weaker steel product prices and a fall in profit margins will rise later this year and next.
China produced 220.1 million tons of steel last year – against global output of 962.5 million tons.
Analysts expect steel consumption in China to rise from 255 million tons last year to about 290 million tons in 2004.