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US and China on brink of bitter trade war

OWoN: They need to talk trade, but it comes down to exchanging blows.

So much for the motherhood statements out of Australia, it is called trade at your neighbor's expense whether it is steel, oil or cotton.

US and China on brink of bitter trade war

Excess supply of steel has forced many of China’s biggest producers to dump excess stock on international markets

The Telegraph
By Andrew Critchlow
16 November 2014

A flood of Chinese steel being dumped on to international metal markets is threatening to pitch the world’s two largest economies into a bitter all-out trade war.

The US fired the first shots last week when the Department of Commerce imposed duties on the imports of carbon and alloy steel wire from China after complaints of dumping made by several North American producers. According to the ruling, some Chinese exporters of steel wire to the US will face anti-dumping duties of as much as 110.25pc.

In response to such anti-dumping rulings, China’s ministry of commerce has repeatedly warned the US authorities to resist protectionist policies and abide by their country’s global commitments to maintain free trade. However, as more and more Chinese metal floods on to global markets, the scene is being set for a broader breakdown in trade relations between Washington and Beijing.

The trigger for the US Department of Commerce’s action has been a dramatic slowdown in demand for steel in China’s domestic construction industry and overcapacity amongst the country’s mills. Platts’ China Steel Sentiment Index has slumped to its lowest level since it began tracking the market in May 2013, as producers absorb slowing domestic demand and a tougher environment for exports.

The index has dropped 12.47 points month-on-month to a reading of 25.61 out of a possible 100 points in November. A figure below 50 points for the index, which surveys up to 75 Chinese steel market participants, shows a contraction in sentiment.

Excess supply has forced many of China’s biggest producers to dump excess stock on to the international market, with a potentially devastating effect for US and European mills. China already accounts for about half the world’s exports of steel. However, the US industry has been helped by lower energy costs in Europe, while in the UK producers are being squeezed from both sides.

“We are confident that weaker Chinese demand during the winter coupled with overproduction will continue to result in high Chinese steel exports, which is also likely to weigh on European prices,” warns Commerzbank.

Despite the slowdown in its domestic market, China is continuing to produce record quantities of steel and this year official figures suggest that output could exceed 80m tonnes. In addition, Chinese producers, which already are among the cheapest in the world due to cheap labour and power, costs are benefiting from a deep slump in the cost of raw materials such as iron and nickel ore.

European smelters are already beginning to suffer from a flood of cheap Chinese steel. According to Macquarie, Chinese stainless steel exports to Europe have surged by 115.4pc to 522,000 tonnes in the first three quarters of the year. The broker also notes that China’s share of the market for cold-rolled stainless steel sheet metal, a material used widely in the European car industry, has climbed to 35pc in the past few months, up from just 10pc last year.

In the UK, the industry’s decline since it was privatised in the 1980s has been pronounced. Recently, Tata Steel said it had entered into talks with Switzerland’s Klesch to sell part of its British operations, raising concerns over jobs in Scunthorpe and on Teesside. To compete with cheaper Chinese prices, the UK industry has focused more on higher- value steel products in recent years.

However, according to Wolfgang Eder, chairman of the World Steel Association, the US is much more aggressive in challenging price-dumping activities than the European Commission.

“You have only free trade in Europe,” Mr Eder, who is also the chief executive of the Austrian producer Voestalpine, told The Daily Telegraph. “Europe is really the only region that has free trade and this creates several problems for Europe as other regions try to protect their economies from competition from outside,” he said.

Oil price slide Iran and Venezuela form alliance to pressure Opec towards $100

Top officials from Iran and Venezuela held high-profile meetings over the weekend that are said to be the first signs of major oil producers plotting to cut production in order to restore oil prices back to a level of $100 (£63.80) per barrel.

Iran’s oil minister Bijan Zanganeh and Venezuela’s representative to the Organisation of Petroleum Exporting Countries (Opec) have held meetings in Tehran to discuss a strategy to halt the current slide in prices, which has resulted in Brent crude falling 28pc in value since June.

“A return to past oil prices is difficult, but we have to modify the price to a level allowed by new market conditions,” said Mr Zangeneh said following the meeting.

Mr Ramirez told the Iranian oil ministry’s state-run news agency, Shana: “We believe that the prices are at a very low level and instability in the market is in no one’s interest. One hundred dollars per barrel is the desirable price for Venezuela.”

Both Iran and Venezuela are thought to be hawks within the 12-nation group of Opec producers. However, both countries will have to convince Saudi Arabia – the group’s largest producer – if significant reductions to Opec's 30m barrels per day production limit are to be successful .

Opec meets in Vienna on November 27.


King cotton appears to have lost its crown after the material joined the global commodities rout.

Cotton traded in New York closed last week at 58.57 cents (37 pence) per pound, its lowest level in almost five years and a 6pc decline on the week.

Cotton is suffering from the same problem now facing the entire commodities and raw materials supply chain: too much supply coupled with too little demand.

The US Department of Agriculture has increased its estimate for global cotton stocks as of the end of the current crop year in 2015 to a record 23.4m tons, largely due to a higher than anticipated picking estimate in North America. Growers expect prices to fall further.



  1. China opened the Stock Connect between Hong Kong and Shanghai on Monday, a huge step toward financial liberalization, which has already caused an investment influx to the mainland.

    This is a big hit.....all slowly moving to open door for mainland China - Shanghai gold exchange

    When the Shanghai exchange runs dry out of silver, they will use the event as a legitimate checkmate excuse to revalue both silver and gold. This ties in with Dr. Jim Willies “GRAND GOLD SHOCK EVENT” prediction. China’s physical gold holdings will go up in value all while they rake in their paper shorts on the other side. This will cause shockwaves to the gold, silver and the FOREX derivative markets!


    In reality, nothing was intended to be decided during US President Barrack Obama’s visit to Beijing, China. US policy regarding China has been more or less set for decades and only superficial, rhetorical changes are made year-to-year for a variety of shorter-term political reasons.
    And despite the language used to market America’s foreign policy both at home and abroad, what US President Obama is bringing with him to Beijing is yet another attempt to reassert geopolitical, military, and economic hegemony over China not only directly, but within China’s growing sphere of influence in Asia.
    This includes attempts to sell the so-called Trans-Pacific Partnership (TPP) – which in reality has nothing to do with “partnership” at all and is merely an attempt to erase national sovereignty as an obstacle to Wall Street and London’s Fortune 500 and their desire to expand their markets into the heart of Asia. Though China is not included in the TPP, a similar bilateral deal is being proposed by the US to open up Chinese markets to these same Western monopolies. Additionally, US domination of Asian markets through the TPP’s implementation will compliment economically, the geopolitical and military encirclement the US is attempting to achieve against China.
    The Brush Fires
    As Air Force One touched down in Beijing, the US State Department’s ongoing political subversion in China’s special administrative region of Hong Kong continued. With the leaders of the so-called “Occupy Central” movement fully outed both by critics and even by many supporters of the movement as US-backed, Beijing labors under no delusions regarding the true nature or intentions of the United States and its perception of where China falls within what Washington policymakers and pundits call their “international order.”
    In addition to Hong Kong, there is the restive region of Xinjiang where the United States is openly backing militant separatists who have been carrying out progressively more violent and widespread attacks across not only the troubled western province, but across all of China.
    Beyond Hong Kong and Xinjiang, there is also a general campaign headed by the US State Department and its National Endowment for Democracy (NED) to sow chaos and sociopolitical division wherever and however it can across all of Chinese society – and within nations China is working hard to establish its influence economically, including across all of Southeast Asia. (more)

  3. The G-20 Summit’s “Pathology of Parochialism”: Empty Proposals on Climate Change, Economic Growth

    It may well have been one of the more successful operations of silencing in Australia’s political history, a classic of “strategic incapacitation”, but the G20 summit could not contain the crass behaviour of its hosts. Journalists and state representatives were treated to a spectacle of prosaic complaint, the cringe whinge fest that ranged between the puzzling and bizarre.


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