Chinese Steel Prices Plummet
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  • Luke Lea

    These are state-owned enterprises. Their responses to market signals are liable to be imperfect. Indeed many of their production decisions are made for political reasons — in response to a direct order conveyed over the red telephone on every CEO’s desk ,for example, which connects to Party central.

  • John Galt

    China’s domestic market is going flat, particularly construction. Also, the export market to the Euro zone and the US are flat or best. Have you seen many steel buildings going up in the US lately.

    In “Recovery Summer 3” the blockbuster sequel, the Architect, the Developer, the Contractor, and the Ironworker all are seen at a Wake for their businesses. It seems that their customers can no longer to afford to rent much more than a video.

  • Jim.

    Tom Friedman, are you listening?

  • CR

    “The latest sign that China’s economy is slowing dramatically?”

    Or indications that China has overbuilt its steel industry and is trying to “sell at loss, make it up on volume”. When demand was high a few years ago they built out lots of new mill. These mills are like sharks in that if they stop moving they die; both physically and economically. So, there is a huge glut of steel hitting the domestic market which cannot absorb it all and the export market is obviously in the doldrums because of the global recession/jobless, wageless, can’t-get-it-up-above-inflation recovery. So, high supply meets anemic demand and, necessarily, prices plummet.

    The end result is the same for the industry, needless to say.

  • CR

    I do hope this leads to a drop in the price of coal. I do some home heating with anthracite and the price per ton has exploded from $180 to $320 over the past few years. Much of that increase has been driven by foreign (read Chinese) demand for US thermal and metallurgic coal.

  • Mike H

    The Chinese currently produce something in the neighborhood of 650 million tons per year, that’s nearly 40% of the world’s production. If local demand dips, they will unload that (subsidized) excess capacity on the rest of the world destroying major steel producers in Japan, South Korea, Brazil, Europe and the US.

  • Luke Lea

    The laws of supply and demand rule even in a centrally planned economy. The difference is that the planners are less nimble than private businessmen.

    When Jesus said “to those that have shall be given, to those who have not shall be taken away the little they have” he was describing whether he knew it or not the law of capital markets that rules on Wall St. Capitalists are the stewards of society’s capital under capitalism. Those that don’t do a good job get replaced. It is to everyone’s benefit in the long run.

  • Actually, I believe the problem is bigger than just economic — the 21st century world poses challenges a Chinese model of society and governance that goes back centuries. I’ve posted on this at great length at:

  • HAPPY2

    Maybe Romney can ease their pain when he discards the ridiculous CAFE standard of 54.5 mpg by whatever year.

    Auto makers are spending large R&D sums trying to substitute steel with aluminum… make Obama & his green nut jobs HAPPY.

  • teapartydoc

    Why don’t the lefties come out and write posts that say the Chinese need to do what the Swedes, Finns, and Dutch do? Isn’t that what they do every time something comes out saying something bad about how things are going here? C’mon guys, get with the program.

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