TPT March 2014

Global Marketplace

In April 2013, China’s largest flat-rolled alloy steel producer, Wuhan Iron and Steel Co, told Reuters that it was setting up a joint venture with an Indian energy company and also would invest in a silicon steel processing and delivery centre in India. “Expanding our businesses overseas has become one of the development strategies for our company,” Sun Jin, director of the publicity office at Wuhan Iron and Steel, told the Global Times . Lange Steel’s Mr Wang sounded a cautionary note. To meet the environmental standards in force in some host countries, only Chinese steel producers of high technological capability and strong capital strength could plausibly hope to enter their markets. › Meanwhile, China’s central government intends to employ other remedies for steel industry overcapacity. Mr Miao of MIIT said that Beijing will raise its standards for energy consumption and pollutant emissions – and severely punish those companies found in violation of environmental protection laws. Oil and gas As railroads in North America overtake pipelines for the transport of crude, yet another derailment prompts the question: at what cost? “The US oil boom caught the pipeline industry flatfooted. As domestic oil production increased by more than 2 million barrels per day over the past two years, companies have been scrambling to reorient their pipeline networks, building expensive new ones and making costly fixes to reverse the flow of existing lines. Those projects take years and cost billions of dollars. Meanwhile, the railroads beat them to the punch.”

Steel China’s plan for its overproducing steel industry: move some companies out, tighten the rules on the stay-at-homes In the English-language Global Times , which publishes an 8-page daily supplement geared to Beijing and another to Shanghai, Zhao Qian reported that China is encouraging domestic steel enterprises suffering from overcapacity to look farther afield. The recommendation, by a top official of the Ministry of Land and Resources (MIIT) and published on that website, is that the companies move their businesses into the more promising steel markets of Central Asia, Southeast Asia, and Africa. (“Steel Firms Should Go Abroad: Ministry,” 24 December) Miao Changxing, deputy director of the industrial policy division of MIIT, said, “The global steel industry is developing unevenly, with some regions like Southeast Asia and Africa still having a big space to develop, and some nations such as China confronting overcapacity.” Mr Miao suggested that the Chinese steel firms promote development in those regions by getting into infrastructure construction and setting up joint-venture enterprises and distribution centres. On the same day, Wang Guoqing, a senior analyst with Beijing Lange Steel Information Research Center, pointedly told the Global Times that “big business opportunities” awaited Chinese steel companies in the emerging markets of Southeast Asia. Leading steel companies in China had already begun establishing a presence in other markets. In April 2012 the largest Chinese iron and steel producer, Baosteel Howa Trading Co, signed an agreement with South Korea’s GNS Co to build a new steel processing and distribution centre in the Korean province of Gyeonggi.

On the last day of 2013, Matthew Philips, an associate editor for Bloomberg Businessweek in New York, considered whether or not this is a good thing. By a macabre coincidence of timing, the most recent derailment of a train carrying crude oil across North America had occurred only the day before. In the fourth such episode in less than six months, a small town in North Dakota had to be evacuated after two trains collided, one carrying thousands of barrels of crude oil, the other filled with soybeans.

Credit: Piotr Menducki

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M arch 2014