25 April 2016

"Daddy, what's a 'global steel war'?"

As reported in The Telegraph:
China is on a collision course with the world’s leading powers over excess steel output after it refused to sign up to an emergency global plan to cut capacity and eliminate subsidies. The clash comes as fresh data confirms fears that China is still cranking up production and even reopening shuttered plants supposedly due for closure, despite the massive glut on the world market. Chinese mills produced a record 70.65m tonnes in March, 51pc of global output and five times as much as the whole EU...

“The scale of the emergency in the sector means it is now life or death for many companies,” said Cecilia Malmstrom, the EU trade commissioner... Brussels has been slow to roll out anti-dumping sanctions, partly due to pressure from Britain and other states courting China for their own political reasons. While the US has imposed penalties of 266pc on Chinese cold-rolled steel, the EU has acted more slowly and stopped at 13pc...

Emmanuel Macron, the French economy minister, said Europe can no longer tolerate the flood of Chinese supply. “You do not respect the rules of world trade. Your steel output is subsidised, and the excess capacity is dumped below cost. It is destroying our productive capacity, and it is unacceptable,” he said...

“The American steel industry faces the greatest import crisis in modern history,” said Tim Murphy, head of the Congressional steel caucus. “We’re at the tipping point, with US mills averaging only 70pc of capacity utilisation, a level that is simply not sustainable. We are in real danger of losing this industry and becoming dependent on foreign countries. We can’t let that happen.”..

China is still selling steel in the EU market at prices below its own production costs, and that does not even take into account transport...”

Yet any sanctions risk setting off tit-for-tat retaliation, and a slide towards 1930s-style protectionism.


  1. i want cheap steel so i can make tanks to store all of my cheap gas!


  2. Isn't the same thing that China did with the plastics industry?

    I truly hate playing the "that's not fair" card. But that's what it comes down to, and I feel that China's economic tactics over the past 10-15 years have been unsavory.

    1. They also did this with rare-earth elements as well. Once the mines in other countries closed, China then instituted a policy that rare-earth elements could not be exported as raw materials. This forced that any items made with such materials had to be, at least partially, manufactured in China. They did this to corner a lot of electronics manufacturing as companies could not get the elements, even at a higher price, from elsewhere as the mines were closed.

  3. The data on the rare earths is a bit dated. After China did this in like 2009, prices skyrocketed. This was a boon to Chinese producers, in particular the onr facility that produced 70% of the rare earths in the world. However, lots of other countries and companies saw a market opportunity and reopened mines and facilities, and invested in new ones. Today, the world supply outside of China is about that of from China. Mining.com reported last year that 90% of China's rare earth producers were running at a loss -- http://www.mining.com/most-chinese-rare-earth-miners-running-at-a-loss-report/

    The export quotas were dropped over a year ago, to try to keep Chinese exports alive.


    But now, we're going into another cycle of reconsolidation -- with the dropping of prices, everyone in the world is struggling to compete with much lower prices and greater supply. But the world response to China's attempt to control the market is still there -- if they try to drive up the prices, other countries and companies roll back into the market, and drive the prices back down.


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