The Chinese government has in the last three or four years been facing the uncontrolled expansion of its economy, but now its growth rate and its extreme expansion in the construction sector are worrying the Asian country considerably. Its two main industries, which are also beyond control, are those producing steel and cement. China produced an estimated 420 million tons of steel in 2006, doubling its output since 2003, making it equal to the total production of Europe and Japan. Its cement production amounts to 1.1 billion tons, i.e. half of all global production. In 2003, its monthly export trade came to 19 million tons, with 50 percent covering the exports of coal. Last year its steel and cement exports doubled to 8 million tons per month, which means 100 more handymax loads per month, mainly to Europe and America. Now China is considering abolishing the protectionist law on exports without levies, believing that cement production consumes too much energy and resources. The rise in steel exports has been adding more worries; the oversupply of steel in the market allows for protectionism and further measures by other exporting countries, such as the USA. As far as shipping is concerned, this export growth has more than covered any gap from a reduction in imports, creating an uncertain picture. But will Chinese exports eventually undermine those of Europe and Japan? Both economies import coal and iron ore to produce steel, unlike China. Dry-bulk market looks up Proving forecasts wrong last summer, the dry-bulk market not only avoided a decline, but actually showed massive growth. Last April, capesize vessels would secure freight rates of $30,000 per day while in the summer this rose to $53,000 per day; in the same period panamax vessels saw an even greater rise, from $14,000 to $30,000 per day. After all, when a market is at a fine balance, it takes only a minor push for it to shift one way or another. During May, there was a small rise in Brazilian iron ore exports to China, mainly due to problems in Australian ports. This signaled the start of a rise in the capesize market, while in smaller vessels the rise was due to the increase in exports of iron and cement products to Atlantic countries (the USA and Europe). In 2005, the biggest growth rate in international trade has been that of iron ore, coming close to 662 million tons, while in 2006 it reached an estimated 710 million tons, with China covering no less than 83 percent of that production. The question is what amount of reserves China is trying to stock and how long it will be before it reaches that amount. Steel production in China came to 400 million tons last year, with the objective for 2010 being 500 million tons. If that indeed is China’s target for its reserves, then global trade will shrink, as China will switch from being an iron-importing country to an exporting one. From importing 50 million tons of iron products in 2004, China exported an estimated 60 million tons in 2006, therefore increasing its production by more than 100 million tons. Only time will tell the course of China’s exports, but at least the activity of capesize vessels is being maintained. Trade in cooking coal rose by almost 3 percent in 2006, according to estimates, mainly thanks to the growth in imports to Japan and to a lesser extent to India and Europe. However, the boom predicted at the start of last year has never actually materialized. The picture is similar in steam coal trading: After a fluctuation of between 5 and 11 percent during 2006, the market should expand by about 3 percent in 2007, the main reason for that being the reduction of imports in Japan, South Korea and Taiwan. Only China recorded a rise in imports. Grain trading generally remained stable in 2006. Asia and Eastern Europe showed relative growth of 3 percent, but imports in the Middle East remained stagnant, while those in Africa declined by an estimated 4 percent. The biggest growth is in Central and South America, particularly Brazil, whose imports posted an estimated 10 percent growth in 2006. This year, however, the grain market should register a small rise, to 112.1 million tons from 108.8 million tons in 200, attributed to the increase in India’s needs and its disappointing production.