This year, demand for the metal in the world's fastest growing major economy is expected to grow 10 percent to 300 million tonnes, the institute said at its annual conference in Seoul Monday.

Steel mills in China, whose economy grew 9.5 percent in each of the last two years, are boosting output to meet the country's demand to make more cars and electronic goods.

The country's production may outpace demand, which will cause a global glut and push down steel prices.

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Its crude steel output in 2006 may increase as much as 15 percent to 390 million tonnes, according to analysts. World steel demand, excluding China, is forecast to be little changed at 698 million tonnes this year and climb to as much as 725 million tonnes in 2006, the institute said.

Also in Seoul, Arcelor chief executive Guy Dolle said China may have the world's single biggest steelmaker by 2015 if the government succeeds in its policy of merging smaller producers into bigger businesses.

China, producer of a third of the world's steel, introduced an industry plan in July which aims to have two steelmakers each with a capacity of more than 30 million tonnes a year by 2010 to compete with rivals such as Mittal Steel and Arcelor, currently the globe's two biggest producers.

China has more than 260 steelmakers today. "You could have a Chinese steel company in the range of 150 million tonnes in 10 years time," Dolle said.

China, which has doubled output in the last four years, may produce 400 million to 450 million tonnes of steel in 10 years' time, he added.

BLOOMBERG