Industry officials said China was in a vicious circle, with a power shortage gripping most of the country's 33 provinces.
"Now the government is in the process of ordering new railways and new wagons. That again is adding to the pressure to produce more steel," said Harry Banga, vice chairman of commodities trading firm Noble Group Ltd.
China plans to invest 2 trillion yuan (US$242 billion) by 2020 to beef up the rail system, extending the network to 100,000km from 73,000km and partially separating passenger and freight transport.
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