TPT July 2014

Global Marketplace

March, showing a drop in both imports and exports, China’s premier Li Keqiang ruled out all but a few inconsequential “mini-stimulus” measures.

The Middle East and Africa accounted for 9 per cent of shipments last year, up from 5.2 per cent in 2007. Europe’s share fell to 16.6 per cent in 2013 from 24.9 per cent in 2007. Possible contributing factors include the availability of high-speed rail service on medium-length routes. In the Asia-Pacific region, transport ministers from 21 countries are working to ease the way for business aviation, which is often hampered by strict bureaucratic rules and – in many cases – by military control of national airspace. Steel Steel demand is poised for recovery in the euro zone and the US, but weakening demand in China will postpone the rewards The World Steel Association (“worldsteel”), which on 9 April released its outlook for steel demand, sees a global weakening in demand through the end of 2014. What demand there is will be driven by recovery in developed markets – mainly the European Union and the United States – even as a slowdown in China, the world’s second-largest economy, will keep steel pricing under pressure. The Brussels-based international trade body for the iron and steel industry expects global steel demand to increase by 3.1 per cent in 2014 and again by 3.3 per cent in 2015, as compared with growth of 3.6 per cent in 2013. Steel demand in China is expected to grow just 3 per cent this year (down from 6.1 per cent in 2013), and to decelerate to 2.7 per cent in 2015 as the Chinese continue re-balancing their economy to favour consumption over investment. The picture is brighter in the euro zone and the US: worldsteel expects steel demand in the EU to grow by 3.1 per cent in 2014 and 3 per cent in 2015; and, in the US, by 4 per cent this year and 3.7 per cent in 2015. But the slowdown in China has meant that companies like AK Steel (West Chester, Ohio) and US Steel (Pittsburgh) have not been able to turn the likely recovery to account. American steel companies also are experiencing continued pressure from cheap imports, especially from China. As well as the severe North American winter, Nucor (Charlotte, North Carolina) cited the negative impact of imports on pricing and margins at its bar and sheet mills as a factor in the company’s disappointing first-quarter results. And prospects seem dim for a tapering-off in the Chinese material any time soon. › As noted by Varun Chandan Arora of the investment letter Motley Fool (11 April), Chinese stimulus measures in the form of infrastructure investment could boost domestic demand for steel, putting the brakes on exports. But Beijing shows no such inclination, despite clear signs that the Chinese economy is slowing down. Even after the release of weak trade data for

Elsewhere in steel . . . › The American Iron and Steel Institute (AISI) on 26 March hailed a decision by a World Trade Organization (WTO) dispute settlement panel upholding a US challenge to China’s restrictions on exports of rare earth elements, tungsten and molybdenum. Joined by Japan and the European Union, the US in 2012 called the Chinese export quotas into question after they were cut by about 40 per cent. AISI president and CEO Thomas J Gibson said of the WTO decision, “[It] illustrates that China cannot continue to manipulate the global trading system by promoting its own industry to the detriment of US and other global manufacturers. These metals include critical raw materials for steelmaking, and the export restrictions clearly favour Chinese producers already dealing with a massive overcapacity in steelmaking.” Tungsten and molybdenum are strengthening elements in a number of steel products. Rare earths, used in automobiles and wind turbines, are mined almost exclusively in China. Trade Seeking tighter ties with the European Union, China finds EU business groups more receptive than national governments “Mr Xi’s call will be seen as a bid to build a rival to a mooted EU-US pact and other significant trade negotiations now under way around the world, the vast majority of which have left China on the sidelines.” Mr Xi is, of course, Chinese President Xi Jinping, whose call was for the European Union and China to actively explore a broad trade agreement. This would, he said in a speech in Bruges on 1 April, make the pair “the twin engines for global economic growth.” As reported in the Financial Times (London), Mr Xi was in Belgium in the course of an 11-day “charm offensive” that included visits to France, Germany and the Netherlands likewise intended to promote his country’s trade ties with the European Union. US President Barack Obama, on a similar mission, had made a much briefer trip to Europe in the previous week. (“China Courts EU on Bilateral Trade Agreement,” 1 April) In terms of effort expended, Mr Xi – who promoted a goal of annual bilateral trade of $1 trillion by 2020 – was the more earnest suitor. But his reminder to the Europeans that, together, they and the Chinese “make up one-third of the

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J uly 2014