General Manager He Wenbo said that Baosteel Group Corp., the parent of China’s biggest listed steelmaker, expects a moderate increase in steel demand this year.

Mr He Wenbo said that “The steel industry hit a trough last year. This year would be better, although we don’t expect a large increase in demand.”

Premier Wen Jiabao maintained an economic growth target of 7.5% for this year as he delivered his final annual work report to the legislature. Li Keqiang, set to become China’s next premier, highlighted plans in his first policy statement in November to build rail, road and sewage systems to support an urban population that exceeded rural residents for the first time in 2011.

Demand may be hurt after China’s cabinet on March 1 introduced measures to tame home prices, including a 20% tax on individuals selling properties, but if you look over a long term, the urbanization process will support steel demand positively.

He said that Shanghai based Baosteel Group may earn more than CNY 10 billion (USD 1.6 billion) in profit this year, without specifying if the number is before or after tax. The company won’t add new capacity in Shanghai and is moving some plants out of the city to comply with environmental norms.