Blaming China for the difficulties faced by steel plants in the United Kingdom is at attempt to mislead the public, official Chinese media said, quoting analysts.
“Following news that Tata, the Indian industrial giant, wants to shut its steel mills at Port Talbot and elsewhere, media reports have been finger-pointing at China, alleging it is flooding the market with steel products at artificially low prices, supported by subsidies from the Chinese government,” Xinhua news agency said in a report.
It pointed out that steel prices have fallen in recent years due to a crash of almost two-thirds in the last five years in the price of iron ore.
According to Statista, a Hamburg-based statistics company, the average price of one metric ton of ore was 55 U.S. dollars in 2015, down from the peak of 168 U.S. dollars in 2011, it said.
Just like the meltdown in the price of crude oil leading to cheaper gasoline, the slump in iron ore prices triggered the downfall in steel prices, Xinhua quoted Lu Xiaoming, a steel industry analyst with the China Economic Information Service, as saying.
Although China produces nearly half of the world’s steel, 88 percent of its products are consumed domestically, and its exports are not large enough to dominate international market prices, Lu said.
The accusation against China of government subsidies is also missing the point, Xinhua said, adding that the Chinese government has been taking measures to shrink its own capacity in steel production in response to a sluggish world economy. Over the past three years, China has cut 90 million metric tons of steel producing capacity and will further reduce it by another 100-150 million metric tons, it added.
“The ongoing depression in the steel industry is a global phenomenon. The UK is not the only country being affected,” it quoted Chinese Ambassador Liu Xiaoming as saying in February.
“In China, the steel industry is having a difficult time too, and hundreds of thousands of steel workers are facing job losses,” Liu said.