Demand for steel in China is helping to raise prices and keep the commodities industry buoyant. Global producers are keen to invest in China because the country’s rapid industrialisation and urbanisation is likely to boost the price of steel, while continuing to support demand for the metal.

Australia’s third-biggest iron ore producer, Fortescue Metals Group Ltd, are set to invest $10 billion to expand its production capacity in order to meet the Chinese demand. The company will have a production capacity of 155 million by the end of 2013. Up to 90% of the output will be used to supply the Chinese market.

Speaking during the Boao Forum at the Asia Annual Conference, Neville Power, CEO of Fortescue Metals Group Ltd, said, “President Xi Jinping’s remarks during the Boao Forum show that the Chinese government will continue to make efforts on economic development and to improve people’s living standards. We are honoured to participate in the process as a supplier for such an important resource.”

As well as importing steel from countries such as Australia, China also has a thriving steel production industry. China is expected to produce 746 million ton of crude steel in 2013; 30 million ton more than in 2012. According to figures from the National Development and Reform Commission, China’s top economic planner, this will result in a new iron ore demand of 50 million tons. This strong Chinese demand is likely to keep Steel prices high for the foreseeable future.