In order to help keep its economy afloat, China’s steel industry has been cranking out steel, “flooding the world with exports” and causing a fear for falling steel prices. China’s ramping up the steel industry is causing steel companies around the world to loose profit and forcing some to cut down on cost, mainly workers. For example US Steel has already begun laying off 614 workers, and has idled six plants since 2014 leading to a layoffs or issues of layoff warnings to around 3,500 workers.
In January China’s steel exports have risen a whopping 63% from just last years numbers, a change of 9.2 million tons. “China produces as much steel as the rest of the world combined—more than four times the peak U.S. production in the 1970s.”
Because of this export frenzy many countries, especially those with steel industries of their own, have had many talks about possible tariffs or other political actions against these dropping prices and excess. Having said that both the US and the EU already have tariffs in place on some Chinese steel products.
“The global steel industry suffers from overcapacity in part because many countries make it a point of national pride to support a domestic steel industry.” This makes sense and shows why China’s excess sales create a very real threat. The excess causes prices of steel to decrease, which means that many companies will take it rather than the steel from the local/country’s companies. Since most countries have their own steel industry this could cause a great pain on the world as a whole. It will be interesting to see how this will affect the world economy and to see how the countries will react to help preserve their economies.