One of these issues is steel. This month, we’ve seen more than one in six jobs in the British steel industry coming under threat of redundancy – with Chinese cheap imports shouldering most of the blame.
The Chinese steel industry has more than doubled capacity since 2006 from under 500m tonnes to over 1.15bn tonnes today. Just a couple of weeks ago, China’s leading steel maker opened its new blast furnace in Guangdong Province, which will add a further 10 million tonnes of capacity a year.*
This increased capacity, coupled with slowing demand, has caused global steel prices to plummet. UBS forecast the gap between global crude steel capacity and consumption will widen from 428m tonnes in 2010 to 700m tonnes this year.
A collapse in steel prices is being compounded by Chinese state-owned enterprises. 500m of 800m tonnes of Chinese steel production is losing money. Rather than shutting down loss-making production, the Chinese state is subsidising the losses. This is because China employs an estimated 250 million people in state-owned enterprises and it fears making those people unemployed. That could both weaken the economy further and increase social instability. I’m sure there are many UK steel workers currently wishing the UK government would follow suit.
