Insight Magazine: Chinese steel output touches new heights
Editor’s Note from Emma Slawinski
As this issue of Insight went to press, ahead of the S&P Global Platts Global Metals Awards, European cities were a stage for a number of popular demonstrations, providing a vivid reminder of some of the biggest pressures on the commodities sector.
Environmental protesters aligned with the Extinction Rebellion movement aimed to cause disruption across the globe, while in France the “gilets jaunes” or “yellow vests” movement, rallying against high living costs, continued to make its presence felt.
The drive to reduce emissions and broader ecological impacts is directly affecting commodities. Pressure to “clean up” comes from all sides, from consumers, to governments, investors and international organizations. But alongside the intensified calls for environmental responsibility, it is clear that swathes of the global population feel they have missed out on the economic prosperity from which others have benefited. This is an electoral flashpoint that has some fallout for the commodities world. Fuel prices and the cost of heating homes, along with the availability of jobs in heavy industry such as metals and coal, are sensitive areas that are being seized on by politicians in numerous countries.
US tariffs on imported steel and aluminum, introduced by President Donald Trump in March 2018 in an attempt to protect domestic industries, sparked further rounds of tit-for-tat duty hikes between the country and China. The measures have proved popular with the US steel trade, and, while not the only factor, the tariffs have undoubtedly contributed to the renewed enthusiasm and mushrooming investments in the sector (see page 25 of the PDF).
Meanwhile, despite challenges for China’s steelmakers both in terms of the trade war and slowing growth at home, the country’s steel output continues to soar. In our cover story on page 8 of the PDF, Paul Bartholomew and Jing Zhang analyze China’s production capacity and find that despite a radical program of closures in recent years, facilities continue to be added, particularly electric-arc furnaces that are held to be better for the environment. The question for this year is, with domestic demand expected to slow, will exports rise, and what will be the impact on global steel prices?
Global and national politics are high on the agenda throughout this edition, as International Energy Agency executive director Fatih Birol discusses the role of OPEC in an evolving oil market, in this month’s Insight Conversation interview (page 14 of the PDF). From page 72, J. Robinson investigates the sudden halting of Mexico’s gas market liberalisation under new president Andres Manuel Lopez Obrador, while our Washington correspondent Brian Scheid discusses the effects of US sanctions on Venezuela on page 78 of the PDF.
Finally, while unpredictable swings in global politics can create an unstable environment for business, they can also push companies to innovate and continuously refine their model. Turn to our section on this year’s S&P Global Platts Global Metals Awards winners on page 80 of the PDF, to learn how participants in the sector have been creating opportunity from adversity.