Steel mill profitability was growing nicely before the recent crack down. i expect to see steel mill profitability continue this trend in an accelerated manner.
The giant overseas steel makers in US, Europe, Japan & Korea and even here in Australia are popping the corks. ArcelorMittal, Nippon Steel, Posco, TATA, JFE, Huyundai are all partying…
~60% of all steel makers in China are actually privately owned including the J Shagang.
Will they hire the guys put out of work in the SOE’s because Uncle Xi wants to produce less steel this year for purely ideological reasons than last years?
Watch as Global steel prices go through the roof, steel production Exchina will set new ATH production output.
The sheer price of steel will become untenable for the local Chinese economy, and workers in the local SOE steel mills will start to push the local authorities to ramp up production.
YTD steel production to June in China is 563.3Mt. This equates to 93.88mt pm. The annualised figure is 1.135bt. The directive put out by China’s CCP is that it wants to produce no more than the 1053bt it produced in 2020.
To do that it is going to have to reduce steel production from ~94 to 82mt. A reduction of ~12mt pm.
I am happy to bet a $1 this is unlikely to occur.
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