SMU Source: Chinese Government Allowing Markets to Run Their Course

The idle mills have been back in production now for 2-3 months and financially supported by new investors. They are back on line to take advantage of this most recent round of price hikes, mostly Billets, Slabs and HRC/CRC and some GI.

Take a look at the attachment on Baosteel [Moody’s downgrade to Baa1 from A3 due to weakening operating performance, oversupply, low steel prices and substantial losses at two of its steel subsidiaries] you can get some idea of the “Pain” within China as well as the affects of worldwide dumping against Chinese Integrated Mills. This is Baosteel we are seeing and if they are having such downgrades, so are WISCO, ANGANG etc..

As for China’s promise to axe 150 Million MTS of Steel, well that is not something one institute or governing body can control John. The Government is allowing the markets to run the course to see where any excess capacity can be cut. Riding the wave so to say… Since the US Mills came out strongly against any Market Economy status being given to China and the most recent Dumping actions and accusations against Baosteel on patent infringements on CRC, the Government has thrown in the towel on the USA, but playing footsy with the EU to acquire the status.

Personally John, I can only sympathize with the US Importers that Capitalism is out the door and Protectionism is here to stay. I wonder whether all of these dumping actions have caused more job losses on the import side or whether the Steel Mills have purposely axed more jobs riding on the back of the accusations.”