Chinese Steel Output Hits All-Time High
Just in time for Trump’s big push against Chinese steel imports.
President Donald Trump thinks Chinese steel is bad for America. Unfortunately for him, now there’s a whole lot more of it.
Chinese steel output hit an all-time high in June, according to data from China’s National Bureau of Statistics, with over 73.23 million metric tons produced that month alone. That new number beats the previous record from April, at 72.78 million metric tons.
A glut of cheap Chinese steel on global markets has pushed prices lower and ratcheted up pressure on the struggling U.S. steel industry. Trump’s tough rhetoric on trade, and especially trade with China, won him strong support in America’s struggling steel industry.
The peak in production raises concerns that even more Chinese steel will hit global markets, further reducing prices. Analysts say June’s output arises from domestic factors rather than an official Chinese attempt to provoke the U.S. president or push back at his rhetoric.
Trump is looking to come through on his promise to make American steel great again, and he could start as early as this month by imposing tariffs or quotas on steel imports. In April, Trump ordered investigations in Chinese steel and aluminum imports, invoking a Cold War-era clause that permits trade restrictions for industries deemed vital to national security.
While the shrinking U.S. aluminum industry is indeed a security risk, say experts, the steel industry’s struggles do not rise to that level.
China has dominated the global steel industry for years, and it currently produces more than half of the world’s supply. Why does it make so much steel?
After the 2008 financial crisis, Chinese authorities feared widespread unemployment and slowed growth could create social instability, so they poured money into the faltering economy in the form of loans and subsidies, often to massive but moribund state-owned enterprises. These companies produce much of the country’s steel, and Chinese central and local governments view them essentially as jobs programs to keep their populace contented.
The result of all this steel production is excess capacity, which China exports at bargain prices around the world.
Of course, bolstering the domestic steel industry isn’t as easy as a tariff or two, and China isn’t even the main culprit in its struggles. Chinese steel comprises only a small portion of U.S. imports, at around 3 percent. The bulk comes from Canada, South Korea, and Germany.
Image credit: Datawrapper