The steel industry is expecting Chinese steel import quotas for 2003-04 to remain more or less unchanged. Industry analysts, however, feel that the quotas for value-added products like galvanised and stainless steel may be further relaxed because their production cost in China is high. China will announce fresh import quotas next week.

Speaking to Business Standard, Anant Katare, senior analyst, Khandwala Securities, said, "There will be no major change in the overall import quotas. However, value-added products may get a larger share in the quotas."

Though there had been a temporary slowdown in steel consumption in China, it was likely to pick up in the coming months, once the Severe Acute Respiratory Syndrome (Sars) was contained, he said.

Industry experts said though steel inventories had been piling up in the last couple of months in China, it was not likely to make a dent on the long-term steel demand.

"China is preparing for the forthcoming Olympic games and is reconstructing a few cities. Therefore, the demand for steel is likely to pick up in the next few years," Arvind Parakh, finance director, Jindal Strips Ltd, said.

The import quotas for stainless steel in 2002-03 had been set at 2.2 million tonnes, while that of the galvanised products was over 1 million tonnes.

However, there has been a drop in global prices due to the piling up of inventories in China. "There has been a lot of speculative buying in China and therefore, the supply has been more than the real demand in the recent past," said an analyst.

It is estimated that China is importing around 30 million tonnes of steel every year. With the US imposing restrictions on steel imports, most Indian steel producers are looking at China.