A few months ago, Tata Steel announced it would close its British plants, including the Port Talbot site, resulting in about 15,000 job losses. Cheap Chinese steel “dumping” or “flooding” the market was blamed for driving down the price of the metal.
But a stat published by UBS shows the scale of the problem, and how small the UK steel industry is in the big picture:
- China is trying to cut 10% of its steel and coal capacity. That means 2 million steel and coal jobs will go in the next few years.
- In that process, 100,000 workers were let go from a single mining company last year, UBS says.
Chinese workers are just as much victims of falling steel prices as British ones are, in other words.
The statistic also gives you an idea of just how massive China is (population: 1.4 billion), and the staggering scale at which changes there take place. Here is the context: As steel producers all over the world have ramped up production, the flood of product as steadily reduced its price. Steel prices have fallen by half since 2012, in US$ per tonne:
This is what UBS analyst Niall MacLeod and his team wrote on Thursday on China’s efforts to restructure its heavy industries:
“Plans to reduce China’s steel and coal capacity by over 10% in the next few years (2mn job cuts), setting aside RMB 100bn to help finance the resettlement of affected workers (half planned in 2016). Baosteel and Wuhan Iron & Steel group recently announced plans to restructure and Heilongjiang Longmay Mining announced 100,000 job cuts (of 240,000) in late 2015.”
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