Tata Steel Limited, the world's 10th largest steel company, is set to increase investment in China by over 5% in 2012, managing director Hemant Nerurkar said. The official, whilst on a visit to Beijing, said the Chinese steel industry had developed very well over the last 10 years.

He said he expected the company's business in China to grow at the same rate as the country's steel consumption growth, by 5% to 7% year-on-year.

Though the company has ruled out any major investments in its rolling mills unit located in the cities of Wuxi in Jiangsu province and Xiamen in Fujian province this year, “the year 2012 would see some positive changes in that direction'', the official said.

Revenue from China contributed around 3% to 4% to the company's total revenue in the latest fiscal year. Apart from local demand, Tata Steel also expects to export more products from its Chinese mills to Europe and Japan.

Though the company is not considering entering into partnerships with Chinese steel players to take this ahead, Nerurkar said that the firm had not ruled out the possibility of developing downstream partnerships at some point in the near future.

"Possible cooperation with Chinese companies also involves issues such as energy conservation, climate change and some energy saving products,'' he told the newspaper.

In June, Tata Steel offloaded a 51% stake in group company Tata Refractories to Nippon Steel's associate Krosaki Harima Corporation and inducted the Japanese firm as a strategic partner. Earlier, on April 21, the leading steel maker announced that it had entered into definite agreement with the Japanese firm for the deal.

Tata Steel continues to hold a 26.46% stake in the firm. Hemant Nerurkar said the Japanese deal would propel the business to greater heights in future. Krosaki Harima Corp is a leading global refractories maker and is 42.9% owned by Nippon Steel. The company is listed on the stock exchanges at Tokyo and Fukuoka.

The Indian company is part of the $67.4 billion Tata Group. The official added that Europe, where it has two-thirds of its capacity, is expected to face significant uncertainty over the next three to six months, which would result in a slower September quarter than in the previous year, due to the US credit rating downgrade and sovereign debt issues in Europe.

He also spoke about the slowdown in steel production in China, and said the world's second largest economy was gradually moving from an export driven economy to a domestic demand driven market.

Stating that the price of coking coal had surged after record rains in Australia's Queensland region, the official added that the average coal price rose 66% in the quarter from a year earlier, while iron ore at Tianjin port in China climbed 10% on average.

Noting that infrastructure investment in China was very high, the official said the country had a good demand for steel. He added that rising demand for more value-added products, such as coated steels, electrical steels and products for the aviation industry would provide ample opportunities for the Indian company in China.

In December, 2006, a subsidiary, Tata Refractory, opened a factory in Yingkou, a city in Northeast China's Liaoning province. Later, Corus Ltd, later renamed Tata Steel Europe, was acquired in early 2007. It also has a trading business in China.