All world workers steel for decline
Source:Xin Steel Industry   Date:2015/11/13

In the gritty northeast English town of Scunthorpe, 25-year-old steel worker Matt Cooke fears for his job, and the future of his industry.

Cooke works for Tata Steel, Britain's biggest steelmaker, which blames planned job cuts - 900 of them in Scunthorpe - on cheap Chinese imports, a strong pound and high electricity costs.

Some 5,000 miles (8,050 km) away in Tangshan, China, steel worker Suo Jiangjun, 35, also contemplates the future of an industry blighted by huge over-capacity and sliding demand.

Both are close to the sharp end of a collapse in global steel prices that is largely a result of slower growth in China's economy, the world's second-largest.

While many British steel workers blame China for squeezing the industry to near-death, and were unhappy that China's President Xi Jinping was feted on a recent official visit, steel towns in China are struggling, too.

As China's growth falters, less steel is needed, exposing the colossal amounts of surplus capacity in cities such as Tangshan, and prompting Chinese mills and traders to turn to exports to keep afloat.

Tangshan, a city of more than 7 million people in the industrial heartlands of northern China, produced around 90 million tonnes of steel last year, more than the United States.

But the drop in prices has left many small and private mills flirting with bankruptcy, and there's little sympathy for their counterparts in Britain.

"Things aren't very good right now," said Suo, who works at Tangshan Youfa Steel Pipe Corp. "We're still making money, but profits are down. A lot of small plants nearby are going to close. I'm not afraid of losing my job right now, I can find something else and China will still need steel."

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In a province rich in iron ore reserves, Tangshan was given leeway to develop its private steel sector as it rebuilt after a 1976 earthquake that killed at least a quarter of a million people and destroyed much of the city's infrastructure.

From 2008, as steel consumption soared in China's roaring economy, many small mills borrowed heavily to expand capacity as quickly as possible. Today, the impact of the collapse in prices is visible across the city's sprawling industrial suburbs.

Tangshan Iron and Steel, part of Hebei Iron and Steel Group, is to suspend operations at its 2,000 sq meter (21,500 sq ft) blast furnace this month, mothballing a facility that can turn out 6,000 tonnes a day. Jianbang Steelworks has shut its blast furnaces amid mounting losses.

Private mills have closed and trading firms and logistics centers stand empty - victims in a way of China's massive 4 trillion yuan ($631 billion) stimulus package in 2008, which drove an unsustainable boom in construction.

"No one in the steel sector is making any money, not just the British. We're just about breaking even," said Ding Guanghui, a 32-year-old steel trader in Tangshan. "Steel mills are losing 100 yuan ($15.78) on each tonne of steel they make."

Prices of steel billet used to make wire and metal products have slumped to a historical low of 1,600 yuan ($252.54) per tonne - cheaper than a tonne of cabbage.




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