Saturday, March 6, 2010

China's Steel Industry Future

China's Steel Industry

China is looking to a steel industry future which features a lot less competition and what sounds like consolidation.

Disatisfaction with the performance of their domestic steel industry revealed in comments by the China Iron and Steel Association, which blamed price challenges on the privately-owned mills as the source of their problem.

Evidently they feel the smaller companies have caused profit margins to fall by expanding their capacity, causing too much steel to be offered in the market.

It sounds like the government-run steel industry companies are going to attempt to push the smaller companies out of the business so they can more effectively control what's going on.

Quicker response to accepting iron ore prices from the smaller companies this year threw a wrench in China's attempt to push down contract prices, evidently inferiating the Chinese, although they're not outwardly showing that.

It looks like China will attempt to put the smaller steel mills out of business so they can control the industry more centrally. I think it will backfire on them, but time will tell.

China's Steel Industry

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