As steel is such an essential material, used in such a wide array of products that it is almost impossible to imagine a world without it, the economics surrounding its trade are closely monitored. You may have heard of ‘dumping’ regulations relating to imported steel from China recently, but what is it all about and how does it affect you?
In relation to economics, ‘dumping’ is a predatory technique of pricing in which manufacturers from one country export a given product at a lower price than is normally charged in the country they are exporting it to or below its production cost. The purpose is to increase market share in foreign countries and drive out competition.
Steelmakers in China are preparing to take full advantage of the recent devaluation of the Chinese yen currency, which has sparked angry protests from steelmakers in Europe and the USA. China's central bank has abandoned its usual regime of exchange rates, resulting in the steepest short-term value of the yen (a fall of 3.3% against USD) since China became the powerhouse, economically speaking, that it is today.
Eurofer, the steel lobby for Europe, warned of the ‘real competitiveness impacts’ on steel firms in the UK and Europe, many of whom are already struggling
United Steelworkers, from the US, accused Chinese steelmakers of being ‘predatory’. The president of the group, Leo Gerard, said that China should “live by the rules or face the consequences”
Nucor said that the devaluation of the yen was the “latest attempt to support Chinese industry at the expense of producers in the rest of the world who have to earn their cost of capital to survive”
The share of global steel output for China has gone from 10% to 50% in just ten years, installing capacity in excess of 1bn tonnes a year that cannot possibly be absorbed domestically. This leaves an excess capacity of 340m tonnes a year, resulting in devalued steep prices of around 40% since the beginning of 2014.
Anti-dumping measures were imposed on China in March by the European Commision but EU members are now calling for tougher action. You can be sure that, throughout the fluctuations in value of stainless steel, BS Fixings will continue to provide products of the highest quality and at the fairest, most realistic and cost-effective price.
Whatever happens in the global market, our focus will remain on delivering the very best experience to our customers. You’re in safe hands with BS Fixings.
Concerned about the current steel situation? Need to know more? Just give our experts a call.