Global Marketplace
144
M
arch
2014
Steel
China’s plan for its overproducing
steel industry: move some
companies out, tighten the
rules on the stay-at-homes
In the English-language
Global Times
, which publishes an
8-page daily supplement geared to Beijing and another to
Shanghai, Zhao Qian reported that China is encouraging
domestic steel enterprises suffering from overcapacity to look
farther afield.
The recommendation, by a top official of the Ministry of Land
and Resources (MIIT) and published on that website, is that
the companies move their businesses into the more promising
steel markets of Central Asia, Southeast Asia, and Africa.
(“Steel Firms Should Go Abroad: Ministry,” 24 December)
Miao Changxing, deputy director of the industrial policy
division of MIIT, said, “The global steel industry is developing
unevenly, with some regions like Southeast Asia and Africa
still having a big space to develop, and some nations such as
China confronting overcapacity.”
Mr Miao suggested that the Chinese steel firms promote
development in those regions by getting into infrastructure
construction and setting up joint-venture enterprises and
distribution centres.
On the same day, Wang Guoqing, a senior analyst with
Beijing Lange Steel Information Research Center, pointedly
told the
Global Times
that “big business opportunities”
awaited Chinese steel companies in the emerging markets of
Southeast Asia.
Leading steel companies in China had already begun
establishing a presence in other markets. In April 2012 the
largest Chinese iron and steel producer, Baosteel Howa
Trading Co, signed an agreement with South Korea’s GNS
Co to build a new steel processing and distribution centre in
the Korean province of Gyeonggi.
In April 2013, China’s largest flat-rolled alloy steel producer,
Wuhan Iron and Steel Co, told Reuters that it was setting
up a joint venture with an Indian energy company and also
would invest in a silicon steel processing and delivery centre
in India.
“Expanding our businesses overseas has become one of the
development strategies for our company,” Sun Jin, director of
the publicity office at Wuhan Iron and Steel, told the
Global
Times
.
Lange Steel’s Mr Wang sounded a cautionary note. To meet
the environmental standards in force in some host countries,
only Chinese steel producers of high technological capability
and strong capital strength could plausibly hope to enter their
markets.
›
Meanwhile, China’s central government intends to employ
other remedies for steel industry overcapacity. Mr Miao
of MIIT said that Beijing will raise its standards for energy
consumption and pollutant emissions – and severely punish
those companies found in violation of environmental protection
laws.
Oil and gas
As railroads in North America
overtake pipelines for the
transport of crude, yet another
derailment prompts the question:
at what cost?
“The US oil boom caught the pipeline industry flatfooted.
As domestic oil production increased by more than 2 million
barrels per day over the past two years, companies have
been scrambling to reorient their pipeline networks, building
expensive new ones and making costly fixes to reverse the
flow of existing lines. Those projects take years and cost
billions of dollars. Meanwhile, the railroads beat them to the
punch.”
On the last day of 2013, Matthew
Philips, an associate editor for
Bloomberg Businessweek
in
New York, considered whether
or not this is a good thing. By a
macabre coincidence of timing,
the most recent derailment of a
train carrying crude oil across
North America had occurred
only the day before.
In the fourth such episode in
less than six months, a small
town in North Dakota had to
be evacuated after two trains
collided, one carrying thousands
of barrels of crude oil, the other
filled with soybeans.
Credit: Piotr Menducki
