TPT July 2014

82 / 100

80 July 2014
Global Marketplace
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
March, showing a drop in both imports and exports, China’s
premier Li Keqiang ruled out all but a few inconsequential
“mini-stimulus” measures.
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