China Steel refuses to stop exporting:
Strong demand from China has particularly put pressure on prices of steel products, which have surged by between 33 percent and 40 percent from a year ago, according to statistics from the Taiwan Steel and Iron Industries Association (台灣區鋼鐵公會).
Industries that use steel, such as the construction, ship building and auto sectors, said they could not afford the higher prices, causing many projects to be halted. A coalition of steel-using industries plans to hold a protest next Monday calling on the government to suspend steel exports like the South Korea government does.
The important thing is to notice the two markets that are operating in this article: the market for scrap steel, and the one for finished steel. Steel producers need scrap steel to make sheet steel; in turn, other industries use finished steel to make automobiles, ships, and buildings. In this case, China's finished steel producers are sucking up the world's stock of scrap steel, hogging the input product from other countries' steel producers. American and Korean steel producers are not happy about this. Steel production is a powerful lobby because it is both capital and labor intensive. Faced with pressure from its steel industry, the South Korean government put export limits on scrap iron and steel bars being sent to Chinese steel producers, and the United State's Emergency Steel Scrap Coalition (love the name) is calling for the US government to do the same.
The winners in this trend are domestic steel producers in Korea and the US and their employees, who can purchase scrap steel in sheltered domestic markets at lower prices, and thus continue to operate at normal capacity. The losers are Chinese steel-dependent industries, which will continue to pay high prices for steel and be plagued by steel shortages at all stages of the production process; and also American and Korean scrap steel exporters, who lose access to the lucrative Chinese market and must then sell their scrap steel at lower prices in domestic markets. Chinese steel producers, who may have favor with the government and thus be subject to few trade limits, will continue to pay high prices for scrap steel from non-Korean and non-American exporters. However they can, and insist that they will, continue to sell the finished steel in lucrative foreign markets.
I think the question that needs to be answered is, why is the following true:
"We understand the difficulties for certain industries, but to halt the exports may generate trade disputes with other countries," said Chen Yu-sung (陳玉松), assistant vice president of the commercial division of China Steel.
These trade disputes
sound fishy to me. Why are Chinese steel producers like China Steel more willing to export their product than to satisfy the demand at home? Why is the Chinese domestic market unattractive?
--Sino-Kazakh oil pipeline to begin construction:
The pipeline would also help link up the oilfields CNPC invests in, giving China better access to Kazakh oil.
CNPC has so far invested almost US$700 million in the central Asian republic.
Where the CNPC is the China National Petroleum Corporation (中国石油天然气集团公司). This is interesting too, but I don't have time to comment on it now.
--And finally some fun links: