Wednesday, July 20, 2005

Steel prices, China, order and chaos

Readers of Industry Week - you are in for a treat! The current online edition has two articles about the future of the steel industry in China.

The first, entitled 'Unconventional Mettle', expounds the Mittal Steel perspective on the future of the industry. It suggests that the steel sector in China will become more business driven and less production oriented in the years to come. Chinese producers, it argues, will join a handful of other highly cost-efficient global players each producing some 80-100 million tonnes of steel each year as globalisation of the industry relentlessly continues.

The second article, entitled 'Mittals Bad Bets', describes some further thoughts from Professor Morici. [You may remember the Professor from one of our earlier postings]. Morici, it seems, has serious doubts about the invisible hand making any sort of show in China. Instead, asserts Morici, because steel prices have so little impact on decision making in China, the Chinese steel sector is likely - in as little as five years - to start dumping subsidised steel on the world stage and posing a serious threat to world steel market stability. There is nothing fundamental about steel ...continues the argument ... that requires there to be just a few world players in the future. Mittal, according to Morici, is making a bad bet about the future of the industry...

What do you think will be the Chinese scenario in five years' time? Order a la Mittal, or chaos a la Morici? Let us know your thoughts.

blogger@steelonthenet.com

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