China’s Steel Industry Bleeds, Prices Collapse, Losses Mount, and Now the Government Gets Gloomy [View all]

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China’s Steel Industry Bleeds, Prices Collapse, Losses Mount, and Now the Government Gets Gloomy
by Wolf Richter • December 9, 2015

[font color="blue"]“A risky strategy.”[/font]

Steel, which goes into nearly everything from skyscrapers to cookware, has become symbolic for what ails China, the world’s largest consumer of it. After years of colossal manufacturing and building booms, soaring demand for steel, and ballooning steel-making capacity, everything has curdled.

The average price of steel in China has collapsed 30.6% so far this year, after having already fallen four years in a row: 7.8% in 2011, 11.6% in 2012, 7.6% in 2013, and 16% in 2014, according to data from Beijing Lange Steel Information Research Center, cited by the People’s Daily, the official newspaper of the Chinese Communist Party.

Despite the crashing price, steelmakers have raised production: 881 million tons in 2011, 951 million tons in 2012, 1.07 billion tons in 2013, and 1.13 billion tons in 2014.

And just then, China’s miracle build-it-and-they-will-come, overstimulated, debt-bloated economy began plowing into a slowdown. According to data from the China Iron and Steel Association (CISA), steel consumption has begun to fall: down 3.4% to 738.3 million tons in 2014.

Steel consumption is likely to fall even more this year – now that new construction has caved, down 13.9% through October, that investment in the real estate sector is languishing, and that auto manufacturing was getting mauled, with sales plunging below last year’s level during the summer. ....................(more)

http://wolfstreet.com/2015/12/09/chinas-steel-industry-teeters-prices-collapse-losses-mount-and-even-the-government-gets-gloomy/