If anyone doubted the magnitude of the crisis facing the world’s largest steel industry, listening to Zhu Jimin (朱繼民), the deputy head of the China Iron & Steel Association (CISA, 中國鋼鐵工業協會), would put them right, fast.
Demand is collapsing along with prices, banks are tightening lending and losses are stacking up, Zhu said at a quarterly briefing in Beijing by the main producers’ group.
“Production cuts are slower than the contraction in demand, therefore oversupply is worsening,” he said. “Although China has cut interest rates many times recently, steel mills said their funding costs have actually gone up.”
China’s mills — which produce about half of worldwide output — are battling against oversupply and sinking prices as local consumption shrinks for the first time in a generation amid a property-led slowdown. The fallout from the steelmakers’ struggles is hurting iron ore prices and boosting trade tensions as mills seek to sell their surplus overseas.
Shanghai Baosteel Group Corp (上海寶鋼集團) forecast last week that China’s steel production might eventually shrink 20 percent, matching the experience seen in the US and elsewhere.
“China’s steel demand evaporated at unprecedented speed as the nation’s economic growth slowed,” Zhu said. “As demand quickly contracted, steel mills lowered prices in competition to get contracts.”
Medium and large-sized mills incurred losses of 28.1 billion yuan (US$4.4 billion) in the first nine months of this year, according to a statement from CISA. Steel demand in China shrank 8.7 percent last month year-on-year, it said.
Signs of corporate difficulties are mounting. Producer Angang Steel Co (鞍鋼) this month warned it expects to swing to a loss in the third quarter on lower product prices and foreign-exchange losses. Last week, Sinosteel Co (中國中鋼), a state-owned steel trader, failed to pay interest due on bonds maturing in 2017.
Crude steel output in the country fell 2.1 percent to 608.9 million tonnes in the first nine months of this year, while exports jumped 27 percent to 83.1 million tonnes, official data showed. Steel rebar futures in Shanghai sank to a new low yesterday as local iron ore prices fell to a three-month low.
China’s mills face some of their worst conditions ever and the vast majority are losing money, Citigroup Inc said last month. The outlook is the worst ever amid unprecedented losses, Macquarie Group Ltd said this month.
China’s steel production might contract by a fifth should the country’s path follow Europe, the US and Japan, Shanghai Baosteel Group chairman Xu Lejiang (徐樂江) said last week. The company is China’s second-largest mill by output.
“Financing remains an acute problem as banks strictly restricted lending to the steel sector,” Zhu said. “Many mills found their loans difficult to extend or were asked to pay higher interest.”
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last