Friday, August 7, 2009

Steel Industry Under Stress

The steel industry remains a ground zero in determining the effects of the current recession, in all their economic and political forms. The industry is simply too huge, employs too many people, and is too vital to military and infrastructure concerns, for governments not to take a strong stand in protecting their domestic interests.

On the back of its government's domestic spending, China's 2009 steel production has increased 6 % against a worldwide decline of 21 % . This, despite chronic profitability problems in China, where there is an estimated capacity utilization rate of 75 % within the industry. In China, as with many of its industries, steel is about employing people.

Rival steel companies in the developed world are losing money and warning that demand will not recover for years. ArcelorMittal recently estimated that in 2009, apart from China, demand will fall by around 20 % worldwide, and not recover to pre-recession levels until 2011. And for China, the preferential treatment of domestic companies has led to the recent WTO disputes flaring up over steel 'dumping' , and the threat of tariffs by the E.U.

Related :1,2,3

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