Thread: help needed to save our manufacturing.

Originally Posted by frantic

Another interesting article.
http://www.businessspectator.com.au/...as-steel-flood
basically the Eu does a 25% tax on Chinese steel, India $326usd per ton and the USA up to 266% tax on imports. But we're waiting for help, and the results if they stopped production would cause a 25% drop in income in the Illawarra, about 7000 homes on the market, which could tip house prices Down statewide.

The link's no good unless you've paid.

Very strange, it lets you in if you go via facebook link, but not directly!

Here's a copy of the article, "The barriers are going up against China's steel flood"

It's not so much a currency war that China is engaging in, but a steel war.

China is flooding the world with cheap steel and Europe, the US and India are now starting to respond with tough anti-dumping measures.

The implications of this for Australia are not great.

Europe has imposed provisional duties on Chinese steel imports of up to 25.2 per cent, India has slapped on an anti-dumping duty of $US316 a tonne and, in the US, three anti-dumping filings have been made, claiming duties of up to 266 per cent.

Eurofer, the European steel industry association, claims that China's excess is now 340 million tonnes out of a total installed capacity of 1.1 billion. ?This overcapacity alone is more than double the EU's steel demand,? it said.

ANZ Bank's commodity strategist Mark Pervan attributes the problem to a slowdown in domestic demand for steel, caused by the decline in housing construction.

He says that's resulted in a 26 per cent increase in Chinese exports so far this year, despite the dropping of 10 per cent export rebate at the start of the year.

?Since 2009, Chinese steel production growth has been outpacing domestic steel demand. The excess supply, keeping production growth positive up until this year, has been exported?, Pervan says.

China's horrendous steel overcapacity has dragged down the prices of both steel and iron ore, and is the key factor in the collapse of Australia's terms of trade.



Chinese steel producers are now facing a terrible problem.

According to Mark Pervan, they are losing an average of $US40-50 per tonne selling steel into the domestic market because of a 17 per cent decline in real estate activity that has cut demand by 50 million tonnes.

But their Plan B of exporting the steel is now starting to be cut off by anti-dumping measures.

?The concern now for Chinese steel exporters is that if anti-dumping duties are introduced (which looks increasingly likely) the positive price arbitrage window will shut.

?This will put a big question mark over the sustainability of China's current high level of steel exports, and ultimately, overall production.?

That, in turn, will put a big question mark over Australia's iron ore industry -- both the price and the volume.

In this context, the 22 per cent bounce in the iron ore price over the past month to $US54 per tonne looks fragile indeed.

The Chinese central bank, meanwhile, is trying to take some of the pressure off the steel exporters by moving the currency lower.

But by doing so, it is flirting with capital exodus out of China and a severe tightening of monetary policy as its foreign exchange reserves are run down, not to mention financial market turmoil, so the answer is not much: 4 per cent off the value of the yuan last week.

The anti-dumping actions initiated by Europe, India and the US will force the Chinese steel exporters to confront either a further decline in prices or volumes, with major production shutdowns.

The short-term implications for Australia's iron ore industry are just as negative, although in the longer term an adjustment to China's production will put both the steel industry and the raw materials industries on a stronger footing.

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The other worry is if China slows their overproduction that's close to 500 million tons of iron ore they no longer need. In the long term it would level out , but short term it would decimate the mining industry.

Originally Posted by frantic

Very strange, it lets you in if you go via facebook link, but not directly!

Here's a copy of the article, "The barriers are going up against China's steel flood"



The other worry is if China slows their overproduction that's close to 500 million tons of iron ore they no longer need. In the long term it would level out , but short term it would decimate the mining industry.

However Chinese steel oversupply even with reductions in production still have to go somewhere and with three major markets inhibited with additional tariffs the oversupply will be pushed to smaller markets. It wouldn't take many months of below cost Chinese steel arriving in Australia for the Steel Industry in the Illawarra to be closed, just like it was in Newcastle a decade or so ago.

If three major markets have initiated anti-dumping tariffs, then Australia should do too, but I fear that is unlikely because we seem wedded to "free markets" irrespective of the fact that in reality a "level playing field" free market is a myth.

Originally Posted by Lotz-A-Landies

However Chinese steel oversupply even with reductions in production still have to go somewhere and with three major markets inhibited with additional tariffs the oversupply will be pushed to smaller markets. It wouldn't take many months of below cost Chinese steel arriving in Australia for the Steel Industry in the Illawarra to be closed, just like it was in Newcastle a decade or so ago.

If three major markets have initiated anti-dumping tariffs, then Australia should do too, but I fear that is unlikely because we seem wedded to "free markets" irrespective of the fact that in reality a "level playing field" free market is a myth.

The playing field is only level at one end, not ours. Successive governments have lacked the gonads to hold out for fairness, particularly with the USA.

Now India have increased their steel tariffs to 12.5%, with their steel companies asking for more, because obviously their labour costs are so much higher than china's
Yuan devaluation spurs India to mull curbs on steel imports - Mineweb
Just 6 days ago south Africa imposed a 10-15% tax on steel imports, but the largest steel company outside china having lost money for 5 years must be wrong in asking for it?
http://af.reuters.com/article/invest...0QX10X20150828

Their govt put a condition on the tariffs of no sackings, wonder if ours would do the same?

I certainly agree that government's should have a 'buy local' policy. Why wouldn't any responsible government ensure local producers got a fair go? Its just smart to keep the money in the local economy as long as possible to multiply its value.

Here's an article from the afr a few days ago, hope this bill gets passed!

by Tim Binsted
Independent senators Nick Xenophon and John Madigan are drafting legislation that would force the federal government to consider local jobs, rather than just price, when procuring goods and services.

Unions are pushing the Abbott government to mandate the use of Australian steel on government projects in a bid to keep the last blast furnace at BlueScope's massive Port Kembla steelworks from closing.

BlueScope boss Paul O'Malley said last week that the iconic plant, in Wollongong in the NSW Illawarra, must cut $200 million in costs or the blast furnace, and 5000 jobs, will go.

"I am drafting legislation, along with Senator John Madigan, that will make it much easier for local participation in Commonwealth procurement," independent Senator for South Australia Nick Xenophon said.

"At the core of the legislation there wil be a presumption that you should procure locally unless there is a good reason not to."

Among other considerations, the two independents want better accountability and reporting of the $40 billion in annual Commonwealth procurement.

The private Senator's bill will also require procurement to consider broader economic benefits from using local product such as employment, tax, 'whole-of-life' project costs such as maintenance, and multiplier effects from keeping those jobs in Australia.

Mr Xenophon said that "other countries are laughing at our procurement policy".

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He said it makes no sense that a government contract could be awarded to a foreigner based on a $5 million saving when the broader benefits of using local product could be worth $30 million to Australia.

"We should structure an annual reporting framework and monitoring of procurement policies. There should be a buy Australian approach where you maximise local industry participation," he said.

$40 BILLION OF PROCUREMENT

"We are talking about $40 billion of Commonwealth procurement and we don't know how much of that is going overseas."

The legislation being tabled is based on a report by the Senate finance and public administrations references committee, of which Mr Madigan and Mr Xenophon were both members, that was published in July 2014 and has been ignored by the government.

But BlueScope's Mr O'Malley's frank assessment last week that "the [Port Kembla] steelworks is on a knife edge" has given the procurement issue fresh impetus.

"This goes beyond steel. I was working on this before steel [went into crisis]. But steel is an example where if the rules were changed to reflect the impact of local procurement, the steel industry wouldn't be anywhere near the trouble it is now," Mr Xenophon said.

The South Australian independent is no doubt also concerned about the future of Arrium's blast furnace at Whyalla in South Australia. Some analysts argue Whyalla will be turned off when it requires its next reline in 2024.

The Australian Workers' Union will hold a mass workers meeting at Port Kembla at 7am on Wednesday.

Part of BlueScope's $200 million of cost savings, which would keep the blast furnace open, is predicated on 500 job cuts.

Mediation between BlueScope and the unions will begin next week under the direction of Fair Work Commission vice-president Adam Hartcher.

The AWU is also demanding that federal industry minister Ian Macfarlane agrees to get the Commonwealth to procure local steel for its projects.



Read more: BlueScope triggers 'buy our steel' bill | afr.com
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Originally Posted by V8Ian

The playing field is only level at one end, not ours. Successive governments have lacked the gonads to hold out for fairness, particularly with the USA.

I was reading a news article on a cruise ship operator in Australia's North West who was told by a Dept or Trade public servant to take his ship/s off the Australian Register and employ foreign crews to save ~60% on salaries. One comment was comparing the US, not only do ships plying the US domestic trade not only have to be US flagged and US crewed, but the ships themselves have to be built in the US. If we had similar rules, South Australian and Williamstown shipbuilding would have more work and Bluescope's and Arrium's still mills would be more viable.

Isn't it all about Jobs and the Economy? At least that's what I keep hearing from someone.