The metals we stock and sell often come with a political context, sometimes because of the way they’re mined, other times because of those who run the nations they’re mined in. This month is no different as a huge row erupts over government subsidies given to aluminium producers by the People’s Republic of China. At the same time steel supplies for the HS2 rail project are causing a stir too. Here’s the news.
Scandal in aluminium supplies, steel suppliers UK and more
The Obama Administration is making last minute waves before handing over the reins to Mr Trump.
President Obama has initiated a complaint at the World Trade Organization about government subsidies provided to aluminium suppliers by the People’s Republic of China. This is the sixteenth such complaint and probably won’t be the last, revealing that Beijing has probably been awarding low-interest loans and energy subsidies to their own domestic aluminium smelters. The result is an enormous and fast-growing glut of the metal, lower global prices and temporary shut-downs by home-grown American producers. Donald Trump is making the restoration of US industry a cornerstone of his presidential term, and he is likely to keep the pressure on after taking power.
The problem is that China’s artificially low cost loans, coal, electricity and alumina have maximised their share of the market and dropped the aluminium price to completely unnatural lows. Obama says these practices are both unfair and illegal, and that, “These kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminum, steel and other sectors.”
The US Trade Representative says China’s aluminium capacity increased four times over between 2007 and 2015, with a consequent drop in price of 46%. As a result China currently controls more than 50% of the world’s aluminium market share. At the same time the US has lost a third of its smelting capacity despite a healthy rise in domestic demand.
US Senator Sherrod Brown added his voice to the protests, saying, “Thousands have lost jobs because of unfairly subsidized aluminum from China that has flooded the market and led to overcapacity, and it’s past time we get tough on these violations before more American workers suffer.”
Having said all that, the China situation has been going on for years and the complaints raised are nothing new. And the issues we face here in Britain are different, namely exchange rate fluctuations and daily rises on the London Metal Exchange, plus rising fuel prices which drive up the cost of smelting and converting aluminium to things like plate or bar.
HS2 railway steel woes
In a move that has caused serious disappointment in Britain’s steel industry, government ministers have apparently refused to guarantee that home-grown steel will be used to build the new £55.7 billion HS2 railway link. The Department for Transport says it won’t give any promises about the source of the two million tonnes of steel needed for the project.
Most of the steel to be used is expected to come from the UK, but the Government’s reluctance to confirm it’ll use British steel has led to rumours that the government might end up buying cheaper steel from overseas. The Liberal Democrats are on the warpath as a result, warning that, “The Government should be doing their utmost to ensure that HS2 are using British steel on the project.”, reflecting the strong tradition of steel production in the UK.
Metal supplies UK – Great prices whatever happens in world politics
Whatever happens out in the wider world of politics, we supply aluminium, steel, brass sheet, carbon steel supplies and a whole lot more at genuinely good, fair prices. If you want to talk metal supply with us, feel free to get in touch.
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