In China, coal is clearly king, but steel is eyeing the crown. After all, China produces and consumes one-third of the world's steel. And while the United States and European Union economies appear destined to retreat this year, China's still-growing economy will likely continue to drive strong domestic and global steel demand, according to China's steel industry's most recent monthly market report. Perfect news for General Steel Holdings, Inc. (NYSE:GSI), a diversified Chinese producer of steel products.

Chinese steel has been in the international headlines lately: last month, much to the chagrin of Beijing, the U.S. Commerce Department slapped a combined import duty of around 700% on steel pipe exported by The Shuangjie Group, a major steel pipe producer in China, to offset Chinese government subsidies, which it says amounts to "unfair" pricing practices. Two weeks ago it was reported that smaller Chinese steel companies have been wooing foreign investors in a bid to gain access to vital funding, markets and technology and avoid being gobbled up by the country's state-run steel behemoths. This week, Tangshan Iron & Steel Group Co., China's third-largest steel producer by output, formally merged with smaller rival Handan Iron & Steel Group to create Hebei Iron and Steel Group, supplanting Baosteel Group Corp. as the country's largest steel maker.

In a nation where the top-20 companies account for 50% of all steel production (with a goal of having the top 10 firms produce half of the nation's steel by 2010), one smaller outfit that seems to be holding its own is General Steel Holdings. Through its Daqiuzhuang Metal subsidiary, General Steel manufactures hot-rolled carbon and silicon steel sheets that are used in the production of tractors and agricultural equipment, shipping containers and in other specialty markets. Its Baotou Steel Pipe Joint Venture produces spiral-weld steel pipes for customers in the gas, . . .

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