very true. they can make real steel when they want to, like in weapons... the rest of it just kinda LOOKS like steel and that is where the similarity ends.
Posted on 07/24/2006 5:28:10 PM PDT by Paul Ross
Suddenly, China dominates steel industry
The Charleston Gazette (W.VA)
07/23/2006
By Author: Paul J. Nyden
Today, China has the world's largest steel industry.
In fact, the world's most populous nation now produces more steel than the next four largest producers combined: Japan, the United States, Russia and South Korea.
Chinese mills make 31 percent of the world's steel. Between 2000 and 2005, Chinese steel production grew by 170 percent, from 126 million metric tons to 349 million metric tons.
China's steel exports quadrupled between 1998 and 2005. Steel imports flooding into the United States doubled between 2000 and 2005.
The growing economic impact of Chinese steel is analyzed in a new report published by the American Iron & Steel Institute called "The China Syndrome: How Subsidies and Government Intervention Created the World's Largest Steel Industry."
"This explosive growth in both production and exports would not have been possible without the support of the Chinese government," the report states.
Government support takes many forms: cash grants, tax refunds, discounted government land sales, forgiving company debts and loans, granting other loans at a fraction of normal interest rates and reducing prices of imported raw materials.
Rep. Alan B. Mollohan, D-W.Va., has long been an advocate of measures to protect jobs at steel mills located in his district, including Wheeling-Pittsburgh Steel and Weirton Steel, now part of Mittal USA.
"Fair trade cannot happen unless all countries follow the rules. This report provides fresh evidence that China doesn't. There is no excuse for us to continue letting it happen," he said.
"It's well past time for the United States to stand up for our companies and our workers. Instead of turning a blind eye to China's actions, we need to shine a spotlight on them and demand that they be halted now."
The new report found the Chinese steel industry "benefited from massive direct and indirect subsidies, many of which violate the [World Trade Organization] Subsidies Agreement, China's obligations under its WTO accession agreement or both."
The rapid expansion of Chinese steel production, the report adds, has led to the "displacement of production in dozens of steel consuming industries from the United States to China, at the cost of hundreds of thousands, if not millions, of American jobs."
For several years, Mollohan has backed attempts to curb China's anti-competitive trade practices, working with his colleagues in the Congressional Steel Caucus and members of the Stand Up for Steel Coalition.
Mollohan has co-sponsored federal legislation to revoke China's Permanent Normal Trade Relations status and repeatedly urged the Bush administration to set quotas on government-subsidized steel pipe imports.
But free-trade advocates in Congress and the White House have repeatedly blocked all those initiatives.
In addition to cash grants, low-interest loans and cheap raw materials, China helps its steel mills by making little effort to provide steelworkers with decent wages, while workplace health and safety conditions are often disastrous, according to the report.
"Workers throughout China are regularly denied basic labor rights," the study notes. "China's labor law prohibits workers from organizing independent unions and does not provide for the right to strike."
The only trade union in China is the All China Federation of Trade Unions, which is basically an extension of the ruling Communist Party.
Workers who protest working conditions and wages are routinely given layoffs, prison time for "subversion of state power" and police beatings, which are sometimes fatal.
In 2005, the U.S. State Department released a study that found China has no policies to prevent child labor, no national minimum-wage laws, no guaranteed overtime pay and "poor enforcement of occupational health and safety laws."
Chinese coal miners probably face even worse conditions.
Official government statistics revealed 5,986 coal miners were killed last year. But far more fatalities may go unreported.
According to a February 2006 story released by France's main news service, Agence France-Presse, independent estimates set the number of annual mining deaths at up to 20,000 in 2005.
China changed dramatically from a net importer of steel in 1990 to a net exporter today.
China's membership in the WTO, strongly backed by the Bush administration, requires it to eliminate government subsidies and to provide other WTO member nations with detailed information about its subsidies.
China does neither.
China did not become a major steel producer until the 1980s. Its steel industry had been decimated by 15 years of war when the Chinese Communist Party came to power in 1949.
After Mao Zedong took over, he began using massive government resources to expand heavy industry. In 1958, Mao launched the "Great Leap Forward" to force massive industrialization. It also led to millions of deaths, especially of peasants moved off their land.
Mao's project also "led to the widespread establishment of small steel mills -- the so-called `backyard blast furnaces' -- in towns and villages throughout China." It was "an economic, technological and environmental disaster," the report states.
The explosive development of Chinese steel production began in 1990. But today, the industry is still fragmented.
In 2000, 1,045 different steel companies operated in China. But only 34 produced more than 1 million tons of steel a year.
Today, there are about 800 steel companies. Only 16 produce more than 5 million tons a year.
In 2004, the report states, just one Chinese steel company, Shanghai Baosteel, ranked among the world's 10 largest producers. Only two companies, Shanghai Baosteel and Anben, produced more than 10 million tons of steel a year.
The Chinese government is planning to consolidate mills and reduce total steel-making capacity from 414 million tons last year to 400 million tons in 2010.
The development of China's steel industry will continue to be dominated by government planning and subsidized by billions in government funds.
Without government aid, "the Chinese steel industry would probably be a fraction of its current size," the report notes.
Steel subsidies are only part of a pattern. China also provides grants and tax subsidies to a variety of other businesses operating at a loss.
In recent reports to the WTO, the Chinese government revealed it continues providing massive subsidies to ferrous-metal, textile, machinery, coal, oil, chemical and tobacco companies.
The report concludes: "The economic stability and security of the United States, and the health of the global environment, demand that the Chinese government end its policy of subsidization" of the steel industry.
Other groups sponsoring the study were the Steel Manufacturers Association, the Specialty Steel Industry of North America, and the Committee on Pipe and Tube Imports.
The American Iron & Steel Institute report, "The China Syndrome," is available online at www.steel.org.
`The pollution is staggering'
Among the ways China has fostered its steelmakers' growth is to ignore environmental dangers, according to the American Iron & Steel Institute's new report "The China Syndrome."
On paper, the country's environmental laws appear strict. But local governments responsible for enforcement do little or nothing, the report says.
"The scale of pollution is staggering," it states. The Shougang mills in Beijing discharge about 18,000 tons of particulates annually, it also says.
On a 2005 visit to China, U.S. steel representatives toured mills of all sizes that "lacked any standard pollution control devices."
Environmental analyses reveal the "concentration of pollution in China closely tracks the location of the steel industry" near the Pacific Ocean.
Steel-generated pollutants include nitrogen dioxide, sulfur dioxide and solid particulates. Some studies estimate China generates 25 percent of all particulates emitted worldwide.
I'm sure the eviro-whack-jobs will be protesting in China over the polution these plants will produce. /s
Not while their sponsors are clipping coupons on the investment.
Suddenly????
This has been coming for years.
Yep
No kidding...
Mollohan's the Dem who had to step down from his post on the ethics committee for his.....ethics.
I am sure that the Steelworkers Union can sit back satisfied.
That strike that sank a crippled industry back in the 1950's really worked, guys.
---sure sounds like a great place for the AFL-CIO to open offices and get organizers working--
The cost of labor in steel is miniscule. It's the regulations that killed them.
LOL!
The CCP's subsidy and discriminatory market and tariff policy is what achieved their sudden domination of the field. All without a free trader so much as squinting at their misdeeds and unfree anti-market behavior.
Pollution regulations forced the mill to close years ago. The plant had once been Reynold's Steel then CA Steel Industries, owned by the Japanese.
He had homes built by people who got favors from the pork he was able to secure for West Virginia.
Yup. That "trade" really generated U.S. jobs. Not!
Hello Paul. Quick question on steel prices. Let's see if we can find a plot of steel prices recently. Sometime over the past couple of years, architectural steel (for my building, for my slab) had gone up at least 2x, seemed like 3x at one point.
I was buying steel from a local supplier that was sourcing it from TXI mills in Texas, (Longview I think), and some tube steel from Turkey.
Now I was to understand that part of the price hikes were due to a shortage, especially of rebar, from the building of the Three Gorges Dam in China, that the worldwide steel prices were going to the highest bidder if distributors could get it.
So now we have Chinese exporting to meet demand. So thus, I suppose this is bad for Americans because all of the Texas and Turkish steel mills are going out of business now?
What's your expectation and have you informed TXI's CEO?
So what?
Unions are dead. Steel is a commodity.
The lawn mower guy at Delphi makes $64 an hour. Any volunteers for this job?
How much does the china lawn mower guy make?
Good riddance to the unions.
No good deed goes unpunished they always say....
I am sure you would not state that without a good reference. Please provide it.
I am sure you would not state that without a good reference. Please provide it.
No quick questions from you. Nor serious. Anyways, Too late. Sorry, have to meet some old Navy buddies.
Seriously, if you were going to build a factory, would you build it in California, where they don't want you, or China, where they do want you?
At one time Mexico looked like a good alternative, with the additional advantage of being close at hand. But broadband has cut the cost of communications, and the security situation in Mexico has cut into its natural advantage, as companies have to contend with trucks being hijacked and their execs being threatened with kidnapping.
So, suddenly China looks very attractive.
The vast majority of these jobs were unskilled labor, but they still were allowed to bring their own.
Novel response from you, Paul! Tip one back for me!
It makes sense.
At this time in its development, with the size of its land, its population and its previous decades of under-development, China probably has the greatest need for steel right now, compared to older already-industrialized nations.
Japan was once the largest steel producer, as it built-up its infrastructure and Japan was later eclipsed by South Korea as Korea took off in the 1990s.
If trends continue, the next top steel producer will be India, and unlike China, India's steel magnates are already very international.
It started with Nixon opening up China, and peaked with Clinton selling military technology for campaign contributions.
Even Napolean knew better than to wake up the sleeping dragon.
This has been coming for years.
I am not as scared as I should be, I guess. Two years ago I bought some Type 303 Stainless bar stock for my business.
It came from China.
It was garbage, bulging, non square rolled stock full of stringers, that took 0.090" per side to clean up before I could even use it.
I fired the vendor: They never got another order.
The Great Leap Forward finally makes good on the promise.
Global demand for finished steel products would be between 1.040 billion and 1.053 billion tonnes in 2006, the institute said, up from 972 million tonnes in 2004.
"The strongest growth continues to come from China, which should see a 10 per cent increase in steel demand in 2005 and a further 7-10 per cent growth next year," the IISI said.
...
"Costs of raw materials and energy continue to represent a major challenge for the world steel industry," the institute said in a statement.
...
Iron ore miners, led by Brazil's CVRD, Rio Tinto Plc/Ltd and BHP Billiton Plc/Ltd, secured a 71.5 per cent increase in prices for shipment in the current fiscal year.
...
"The big three [ore producers---not Chinese mills] use their market position and their current behaviour is a threat to the long-term competitive position of the steel industry," Christmas said.
He added iron ore prices had climbed 256 per cent since January 1999, while steel prices had risen only 156 per cent in the same period.
"The situation of iron ore prices rising faster than steel prices is not sustainable," he said.
IISI data released on Monday forecast China would consume 320-330 million tonnes of steel next year, up from 300 million in 2005 and 272 million in 2004.
"China accounts for one third of the total and will grow approximately 10 per cent each year," Christmas said.
The rest of the world would consume 720-725 million tonnes next year, from 698 million in 2005 and 699 million last year.
World steel demand this year would be 998 million tonnes, the institute said.
Chinese produced steel purchased in the United States costs more than American made steel ever has...
I'm not a big fan of unions either, but I believe you're right here. The unions aren't the cause of the current steel situation.
I've kind of come to the conclusion that the word "steel" just doesn't translate properly into Chinese.
Sure it does: Chineese word for steel:
"A cheap commodity where union thugs in the US make a fortune. See also: Union thugs, sleeping, phantom-punch-clocks, mafia, rust-belt, they-took-our-jobz."
Former power in the us and communist countries, steel industry in the US went the way of buggy whips.
See also: buggy whips, stupid high school dropouts, voter fraud, my-dad-was-union, "they took are jobz."
Owned by a guy from India.
I've used it. What they call steel isn't.
very true. they can make real steel when they want to, like in weapons... the rest of it just kinda LOOKS like steel and that is where the similarity ends.
In 2004, robust global flat rolled steel demand led to a rapid escalation of U.S. spot market selling prices over the first three quarters of the year, reaching a record level of US $740 per ton as published by CRU International Inc. in September 2004. Increased levels of imports into North America in the second half of 2004 resulted in higher inventories throughout the supply chain which led to a decline in industry-reported prices of approximately US $100 per ton during the fourth quarter. In 2005, the high inventory levels, combined with softening end-user demand, resulted in a further decline in published hot band spot prices of more than US $200, reaching a low of US $425 per ton in August before recovering to US $550 per ton for the fourth quarter, as reported by CRU. Source
OK, so you have a price range for steel of from $450 to $740 per ton.
Examples stating quantitative labor cost per are harder to come by because they don't like advertising it, but South Korean labor cost per ton steel is $12. One could triple it or halve it and it wouldn't make as much difference as many other factors.
Here's another take in Nucor's case: Because (CEO) Iverson practiced what he preached, he earned the right to boast that Nucor had the lowest labor cost per ton of steel and the highest-paid workers in the industry.
Such would not be possible if labor was a large part of total cost. It isn't. Capital is the biggie, and a lot of it is purchased to comply with regulations covering everything from safety to environmental.
The labor cost per ton has been dropping industry wide as the equipment becomes ever more automated and switches to induction furnaces. In the steel industry, for example, during the last eight years labor cost per ton of steel declined 21.9 per cent, here's another example.
http://www.chartersteel.com/
This is where real steel is made-not some out of round Chinese crap.
Plenty of hard working Americans are making high quality steel.
Steel buyers will find out that about all that Chinese steel is good for is rebar at the bottom of a freeway
Chinese drills and end mills sold at discount places are proof that cold-rolled steel can be titanium nitride coated.
I think "steel" translates into Chinese, but it's a VERB! :-)
Or a certain tunnel in Boston! :-)
Well now, that's in the past...
And these union thugs used to spend those big, fat, unearned paychecks on American union made cars, American union made appliances, paid big taxes to the gov't...
But now, those big wasted wages on America's blue collar workers goes to multinational CEOs and the Red Communist Chinese gov't and then to Russia to pay for all those supersonic jets, and nuke submarines...
That's much better, ain't it...You happy now???
Nice post. Thanks for the ping.
Let the dollar fall, since the Chinese refuse to allow the renimbi to reflect its real market value.
The Chinese will be forced to decouple the renimbi from the dollar when they see the value of their foreign reserves melting away.
BUMP
It does mean something when Mittal goes and makes a $9 billion investment in steel production in India, and is followed soon after by a $12 billion investment in India from the steel congolomerate POHANG from Korea and another advance in its India steel production plans fom the Corus Group from Great Britain.
Maybe they are counting on the fact that India has vast untapped resources for steel (iron ore reserves of 24 billion tons but uses only 150 million tons a year). As India's need for infrastructure building continues to expand with its economy, so will its need for steel and with its iron ore reserves (much greater than China's) the economics will drive India's steel production up radically in the next few decades.
Yes, Mittal made his fortune outside of his native India, that does not mean he is blind to the needs and possibilities for his steel company there.
I am not saying China has not risen to the top.
I am saying that past trends in this are have followed the domestic requirements of "nation building" coupled with the foresight of national leaders to increase domestic production when that domestic demand was so high.
At some point, that domestic demand levels off, as it did in the U.S. and "old Europe" in the late 60s to mid 70s, as in did in Japan in the mid 90s and was then picked up in what may have been the final peak demand in South Korea.
At each of those peak domestic eras, the domestic industry became great exporters also. As their domestic demand quit growing as rapidly, other nations peak demand picked up, as did those other nations desire to produce locally.
All I am saying is China may be on top - in steel - now, it will be someone else's turn (I think India's) in 15 to 20 years.
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