China and Britain are both facing the dilemma of global steel prices plummeted, while one of the most important reason behind this is Chinese economic growth has slowdown. Although many British steel workers blamed that China has pushed British Steel Industry into a impasse, but in fact, Chinese Steel Industry is also struggling. Since the slowdown of Chinese economy and the decline demand for steel products domestically, it causes a lot of excess capacity. The cities like Tangshan are facing many pressure, and may local manufacturers focusing more on the international market rather than domestic market. Tangshan is a city have 700 million people and is one of the most important steel industry city in China. After the devastating in 1976's earthquake, Tangshan has quickly rebuilt as the industrial center in north of China. The city's steel production quantity has reached 90 million tons which has overpass the United States. However, the decline of steel prices has led many small and private factories bankruptcy. The situation in this year is more like a economy " earthquake" for Tangshan. " The current situation is not good" Jiangjun Suo Said, he worked in Tangshan Youfa Steel Pipe Company. " Although the company is still producing, but the profits declined. Many small factories nearby had closed down in this year. I am worried about losing my jobs. China still needs steel products, hope I can find work in other factories."
Tangshan located in a province which reserves enough iron ore. Due to the earthquake in 1976, many local infrastructure were damaged which create a developing chance for private steel companies. Since 2008, with the rapid development of Chinese economy, Chinese steel consumption is growing. Many small steel factories had the chance to get fund and expand quickly. Today, steel prices plummeted was an negative impact on this city's growing. For example, Tangshan Iron and Steel Company as a subsidiary of Hebei Iron and Steel Group, is planned to shut down their 2000 squire meters' blast furnance outage in this month and sealed a production facility which has the production capacity of 6000 tons per day. Another Jianbang Steel Company has shut down their blast furnance outage due to the lost of the company. Many private factories have closed, the trade and logistics centers has been empty for a long time. They are the victims of 2008 Chinese 4 trillion RMB fiscal stimulus which led to unsustainable construction wave during that time. " Nobody can make money in steel industry in China. Not only in United Kingdom facing this situation, so does China." A 32 year old steel trader, Guangshui Ting said. " Every ton of steel produced by the factories, will causes a lose of 100 RMB (15.78 US Dollars) for the manufacturers. For the manufacturer of wire and metal products, the price of steel billets fell to a historic low price. (1600 RMB per ton = 252.54 US Dollars per ton). The price for steel billets is even lower than the price of one ton of cabbage in China today. China has the ability to produce 1.2 billion tons of steel products per year, the quantity covers about three quarters of the total global demand. The decline in domestic demand means that China have to make up for the lack of domestic demand through exports. Last year, only in Hebei Province the export quantity for steel products has reached 2720 tons. This quantity covers around 29% of the country's total steel.
According to the International Iron and Steel Statistics Bureau Data, the UK is one of the Chinese steel export market last year. The number of British imports from China has reached 752000 tons. Although this quantity is only a small part of the UK's total steel imports, the lower importing cost has reduced the market price in UK which create a negative impact on UK steel industry downturn. However, workers in UK steel industry has also admitted that there are many other reasons causing the decline of British steel industry. " This is not China's fault, in the Europe Market, UK can not compete with other Europe Countries anyway. 35 year old steel worker, John Laurens said who worked in Scunthorpe Steel Industry. British steel industry is committed to reducing the high cost of energy, but the world's highest environment protect tax make this issue more complicated. The British government said that what they can do is very limited, no government can change the price of steel, or changing foreign exchange rates, or even ignore the international norms or free trade state aid rules.
In China, the entire steel industry is dominated by large state owned steel companies. While in the UK, there are additional government funds to help diversify the iron and steel development and retraining the steelworkers. Tangshan Iron and Steel's annual production quantity is over 40 million tons at present, the government indicated that it will be decreased before the year of 2017, and the city is seeking economic restructuring, and will be positioned as one of the advanced robotic research and development centers in China in the future. While in the UK, the government and Tata Steel has committed to allocate 9 million pounds ($ 13.9 million) to attract new businesses into the steel industry and employment retraining.
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