The rapid growth of the industry will maintain for sometime despite the slowing down pace in June and July, the report said, quoting Zhao Zhicheng, a researcher with the Guangda Securities.

In June and July, China's steel output dropped to 28.54 million tons and 29.24 million tons respectively from 29.72 million tons in May.

Statistics showed that in the January-July period, China's steel output came to 194 million tons, registering a year-on-year increase of 28.06 percent, with crude steel output increasing by 42.45 million tons year on year.

The statistics also said that the growth rate of China's privately-owned steel mills ranged between 49 to 68 percent from January to July, two to three times higher than that of the state-owned ones.

The huge investment in the steel industry by privately-owned and collectively-owned enterprises in the year 2003 and 2004 is the main factor, according to Zhao.?