The global steel industry: What’s behind the downturn?
We explore the reasons behind the steady collapse of the steel economy, from China to Britain’s oldest plant.
Steel is found everywhere from bridges to sinks, but the global steel industry is going through the worst downturn in 50 years.
An unbalanced supply and demand equation has left even China, the world’s largest producer and consumer of steel, calling for global cooperation to try and tackle the industry’s problems.
But while China is calling for cooperation, many blame China’s steel mills for flooding the market with cheap supply.
China has produced more steel in the last two years than Britain has since 1870.
Over in the UK, Tata Steel, an Indian company, put its entire business up for sale, blaming cheap Chinese imports for its decision.
The UK boasts the world’s oldest steel industry and Port Talbot in south Wales is home to Britain’s largest steel plant.
With the UK steel industry on the verge of collapse, we see how tens of thousands of jobs are at risk with the imminent closure, or at least significant downsizing, of the Port Talbot steelworks, which has already been on the decline for decades.
Although many blame the cheap steel making its way from China, others say the UK government has not offered the steel industry enough protection to help it stay competitive.
Steelmakers in China are also suffering. When China outlined its latest five-year plan it said that job cuts in the steel sector were likely.
In China, we see how job losses in the steel industry have become more commonplace. With the economy growing at its slowest pace in 25 years and steel mills producing at overcapacity with the lack of demand for raw materials, China has been exporting steel at low prices. Economists say, however, this is only a short-term solution and companies will need to restructure to be efficient.
Russell Jones, a partner at Llewellyn Consulting, speaks to us about the steel industry’s problems.
Also on this episode of Counting the Cost:
Lebanon’s bad rating: Lebanon has borne the brunt of the Syrian refugee crisis over the past five years and has faced political and financial turbulence. Now, the Saudi decision to cease payment of $4bn in military aide and its ban on Saudi citizens travelling to Lebanon – a move than other Gulf countries like Qatar, Kuwait, the UAE, and Bahrain have emulated – have caused Standard & Poor’s credit rating outlook for Lebanon from fairly positive plunge to “negative”.
Hong Kong’s property market slump: Hong Kong is known for its boom and bust real estate patterns and for being one of the most unaffordable places to buy property in the world. Falling prices and economic uncertainty have analysts describing the market as a “slow motion train wreck”. But it’s not bad news for everyone: this slowdown is being considered a glimmer of hope by first home owners, who have so far been priced out of the market, and investors wanting to buy back in.