China’s steel giant’s fall could shake world markets. He writes about it Bloomberg.
“As prices fall, margins are getting tighter. I can barely make money this year,” lamented Yu Yongzhang, a steel piles trader in Shanghai. His sales have fallen by 75 percent.
The situation forces Beijing to look for a way out.
“Without decisive mergers and restructuring, it will be very difficult for steel to exit the cycle in the next 2-3 years,” said Steelhome analyst Wu Wenzhang.
Low domestic demand and large overcapacity make steel exports profitable. For the first half of 2024 alone, China exported about 50 million tons, an amount comparable to US production.
Cheap Chinese metal is putting pressure on world prices. Chile has already closed its Huachipato plant due to “unfair competition”.
“We will all lose our source of income,” worries Chilean union leader Hector Medina.
Such consequences threaten the economies of the United States and Europe. Berlin is already monitoring the situation because of the risks to the profitability of German metallurgists, the agency writes.
It was known before that substitution China’s global copper production will require an investment of about $85 billion from the West. China controls 97% of global capacity and abandoning the Chinese industry will send copper prices soaring.
Russian authorities previously stated On the growth of steel production.