EuroWire September 2017

Transatlantic cable

Hamad al-Ansar of the Qatari ports management company Mwani said ties with Turkey and Iran, which ew goods into the capital city of Doha during the boycott, might expand. “We’ll open a relationship with anyone who can bring cargo,” he told Hellenic Shipping News . (“Gulf Crisis a ‘Blessing In Disguise’ for Qatar Seaport,” 16 th June) † Even so, ten days into the boycott, the cutting of transport links did a ect some services to and from Qatar. One port o cial said that ships from Shanghai, which normally go through Jebel Ali in Dubai, had to be re-routed via Iraq, adding seven days to a normal 20-day voyage. But – that early in the boycott, at least – it seemed that a week’s delay in the arrival of materials might be something that the Qatari steel industry could tolerate fairly well. Appraising China as an opportunistic exporter of steel to the USA, a contrarian sees the threat as more apparent than real Datelined Sydney, Australia, a column by David Fickling on the Bloomberg fast-commentary platform Gad y challenges the view – widely held in the USA, most notably by President Donald J Trump – that China’s steel mills are killing their American rivals. (“Don’t Blame China for the Fall of US Steel,” 13 th June) Mr Fickling began by acknowledging that, since 2000, China’s output of steel has risen more than 560 per cent, from just over 100 million metric tons per year to 690mmt over the 12 months to this spring. In the same period, USA manufacturing employment in steel, aluminium and copper has dropped 38 per cent, from 625,000 to 385,000 jobs. As US Department of Commerce (DOC) o cials prepared to brief Congress on 16 th June on an investigation into whether steel imports threaten USA national security – and commerce secretary Wilbur Ross weighed anti-dumping measures – Mr Fickling addressed the question whether the prima facie case against China is as persuasive as it seems. Here, condensed and edited, are his ve arguments that it is not: † A poor country uses very little steel per unit of gross domestic product (GDP). As it industrialises, its usage (”steel intensity”) increases rapidly until the country starts to transition toward consumer-led growth. At that point, steel intensity will start to slip as spending shifts from industrial products like machinery and buildings to less metal-intensive categories. Considered in the context of the evolution of steel intensity, Mr Fickling asserted, USA metal output isn’t declining as a result of overseas competition “but because, as America gets richer, it’s buying di erent stu .” Further, employment is su ering in the USA because the steel it does produce is being made more e ciently. According to the Bureau of Labor Statistics, labour productivity (real output per labour hour) in the American primary metal sector more than doubled from 1987 to 2016. America’s steel mills produced some 79 million tons over the year to mid-June, compared with about 742,000 tons of imports from China. Wrote Mr Fickling, “You have to squint quite hard to even see Chinese steel imports to the USA, when compared to the size of the domestic trade.”

† Separately, the USA-based job-search site Indeed reported that more than 10 per cent of new jobs created in the UK through mid-June were in technology, with AI and data among the primary drivers. Russ Shaw, founder of Tech London Advocates, told Indeed (14 th June), “The salaries and prestige associated with the most in-demand specialisms – AI, data science, software developer – are turning them into the rock stars of the business world.”

Steel

Steel in the blockade of Qatar by Persian Gulf neighbours: how much of an Achilles heel? When, on 5 th June, Saudi Arabia, the United Arab Emirates (UAE) and Bahrain severed diplomatic, trade and transport ties with import-dependent Qatar, the halt in tra c into and out of Hamad Port raised fears of shortages of food and other essentials. But concern was also expressed for Qatar’s steel trade, both imports and exports, with those nations and others. One early commentator, SteelOrbis , reported a consensus among its market sources that the Qatari steel industry would have to be negatively a ected. The e-trading platform considered the situation faced by Qatar Steel, the rst integrated steel plant in the Arabian Gulf and a regional steel industry leader. Feedstock billets for the company’s wire rod mill in Dubai normally move from Qatar to Dubai through Saudi Arabia. Blockage of these deliveries by the boycott would require Qatar Steel to nd suppliers of billet where it could. Qatar had also been exporting rebar to Saudi Arabia, Yemen and Libya. Even if existing rebar commitments were honoured, it seemed to SteelOrbis likely that subsequent exports would be halted. This would mean opportunity for Turkish steel producers who sell rebar in the region. The political situation is still uid at the time of writing, and there had been little news of steel speci cally. But on 16 th June, Hellenic Shipping News reported on a bustling Hamad Port in Qatar, with giant yellow cranes lifting hundreds of containers o cargo ships onto lorries waiting ashore. After the launch of new direct shipping routes to cope with the crisis, port o cials believed the worst was over; they said the episode might even help Qatar seal new transport deals that would circumvent its Gulf neighbours. “The rst ve days of the crisis there were fewer shipments,” said a supervisor at the port. “Now it’s back to normal. I’ve seen the schedule and it looks packed.” This appeared to be an accurate reading. An alternate route to India’s Nhava Sheva Port was announced on 14 th June after two new services opened from Oman, which remained neutral during the crisis. Earlier in the week the world’s biggest container line, Maersk of Denmark, said it would accept new bookings for container shipments to Qatar from Oman. The rst ship on a new direct weekly service from India’s Mundra Port was expected to arrive shortly. Turkish vessels were on their way.

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September 2017