Crude Steel Production: China Blows the Doors off Rest of the World During Pandemic After Already Huge Surge in 2019

Never let a good crisis go to waste. US production, 4th in the world, plunged 32% in April. India’s production, normally in 2nd place, collapsed 64%.

By Wolf Richter for WOLF STREET.

Global production of crude steel – ingots, semi-finished products (billets, blooms, slabs), and liquid steel for castings – dropped 13% in April compared to April last year, to 137 million metric tonnes (Mt), according to the World Steel Association. While China’s production, at 85 Mt, was flat with a year ago, production by the rest of the world (without China) plunged 27% to 52.1 Mt.

India’s production, normally the second largest in the world, collapsed 64% in April. US production, in fourth place, plunged 32%. China’s crude steel producers – many of them state-owned – are doing in this pandemic what they did during the Global Financial Crisis: They catapulted their global dominance to the next level. In April, they produced 62% of the world’s crude steel:

In the year 2019, crude steel production rose 3.0% to a record 1,869 Mt, having soared 51% over the past decade, and 150% since 1996, according to data from the World Steel Association’s 2020 report, released this week.

During this period, there have been only three episodes when annual crude steel production declined: the Asian Financial Crisis in 1998 (-2.7%); the Global Financial Crisis in 2009 (-7.8%); and in 2015 (-3.0%), when China, under pressure from skidding steel prices, made a short-lived effort to get money-losing overproduction at its steel makers under control:

China’s steel giants, supported and often owned by various government entities, kept on producing crude steel during and after the Financial Crisis, even when there wasn’t enough global demand, causing prices to fall.

China’s market share dipped in 2008, during the Beijing Olympics, as some of the biggest steel producers and polluters were shut down to clear the air for global audiences. But then during the Global Financial Crisis, China just kept producing, and its market share of global crude steel production soared from 38% in 2008 to 46.6% in 2009.

In 2017, China outproduced for the first time the rest of the world combined. In 2018, it advanced its lead.

In 2019, China’s production surged 8.3%, while production in the rest of the world fell 2.3%. This pushed China’s market share to 53.3% for the year (and by April 2020, on a monthly basis, its share soared to 62%):

In 2001, China’s market share surpassed for the first time the market share of NAFTA (the US, Mexico, and Canada), and then look what happened:

Among the top 20 producing countries, only three increased their share since 2017:

  • India, in second place. While its market share in 2019 dipped to 5.9%, after the jump in 2018, it was still higher than it had been in 2017 (5.8%). India had moved into second place in 2018, surpassing Japan.
  • Iran, in 10th place, whose share rose from 1.2% in 2017 to 1.4% in 2019.
  • Vietnam, in 14th place, whose share rose from 0.78% in 2017 to 1.1% in 2019.

All other major producers, including top producers Japan, the US, Russia, South Korea, and Germany, lost market share in 2019 and 2018.

China’s production of crude steel is 9 times the production in India, 10 times the production in Japan, and 11 times the production in the US. Marked in red: The US is in fourth place (87.8 Mt), Mexico in 15th place (18.5 Mt), and Canada in 18th place (12.9 Mt):

The 15 largest crude steel companies in the world in 2019

Eight of the 15 companies that produced the largest quantity of crude steel in 2019 are Chinese companies. Six of them are owned or controlled by government entities in China. The one US steelmaker on this list, Nucor, fell from 12th place in 2018 to 14th place in 2019.

There have been numerous international mergers in recent years, and production under one company can take place in various countries where the merged companies are located:

  1. ArcelorMittal (97.3 Mt). Includes shares in AM/NS India and China Oriental. In 2006, India’s giant Mittal Steel acquired French giant Arcelor. Registered in Luxembourg as a mailbox company, it is run from India.
  2. China Baowu Steel Group (95.5 Mt, up from 67.4 Mt in 2018); includes the tonnage of Maanshan Steel and Chongqing Steel – owned by the government of China.
  3. Nippon Steel Corporation (51.7 Mt); formerly Nippon Steel & Sumitomo Metal Corporation. Includes tonnage Sanyo Special Steel, Ovako AB, and shares in AM/NS India and USIMINAS – Japan.
  4. Hesteel Group, formerly HBIS Group (46.6 Mt) – owned by the government of Hebei Province, China. Includes Serbia Iron & Steel d.o.o. Beograd and MAKSTIL A.D. in Macedonia
  5. POSCO (43.1 Mt) – South Korea.
  6. Shagang Group China (41.1 Mt) – privately owned, China.
  7. Anshan Iron and Steel Group, or Ansteel Group (39.2 Mt) – owned by the government of China.
  8. Jianlong Group (31.2 Mt) – privately owned, China
  9. Tata Steel Group (30.1 Mt) – India.
  10. Shougang Group (29.3 Mt) – owned by the government of Beijing, China.
  11. Shandong Steel (27.6 Mt) – owned by the government of Shandong province, China.
  12. JFE Holdings (27.3 Mt) – Formed in 2002, in merger of NKK Corporation and Kawasaki Steel, Japan.
  13. Valin Group (24.3 Mt) – controlled by the Chinese state, with a minority of shares publicly traded
  14. Nucor Corporation (23.1 Mt) – North Carolina, USA
  15. Hyundai Steel Company (21.6 Mt) – South Korea

But it’s not like China is dumping crude steel on the global market.

China uses most of the crude steel it produces at its factories that convert it into finished steel products that are then either exported or used in China’s construction industry, including pipelines, and in its manufacturing industry to make components, motor vehicles, washing machines, towers of suspension bridges, etc., some of which are then exported as well (the tower of the new San Francisco-Oakland Bay Bridge and many steel components were made in China).

In terms of crude steel exports from China, the quantities amount to only about 5% of its total crude steel production. But at 48.3 Mt of net exports (exports minus imports), China is the largest crude steel net-exporter, ahead of Japan (26.7 Mt), Russia (22.7 Mt), and the Ukraine (14.0 Mt). The US is the largest net importer (imports minus exports) of crude steel (19.8 Mt) ahead of Thailand (15.1 Mt), and the EU (12.4 Mt).

“The recovery is expected to be slow and uneven. It has not started quite yet based on the weak heavy-truck orders in May.” Read... This is What US Heavy-Truck Manufacturers Face After a 19-Month Order Collapse to Historic Lows

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  120 comments for “Crude Steel Production: China Blows the Doors off Rest of the World During Pandemic After Already Huge Surge in 2019

  1. Matt says:

    Apologies for going off topic so quickly, but can someone explain the exact transmission mechanism of liquidity created through quantitative easing into higher equity prices? I understand the Fed purchases debt securities from primary dealers, but most explanations simply go on to say that primary dealers hold the proceeds as excess reserves. Someone must take those excess reserves and purchase stocks, obviously not the primary dealers. So how is this newly created money finding its way into the stock market?

    • c1ue says:

      Among many ways: excess liquidity enables hedge funds to leverage up purchases.
      Excess liquidity also reduces borrowing costs, which encourages companies to buy back their own stock.
      And the most important: excess liquidity = lower interest rates = much less attractive bond performance vs. stock performance (and risk).

      • Portia says:

        I remember Joe “Your Money or Your Life” Dominguez in the 1992. It was plausible to get a reliable income through bond purchases. My then husband and I got the book and tape series and it actually changed our lives–and I had been in the accounting profession for 6 years. Whah hoppen to bonds?

    • Bobby Dents says:

      It isn’t

      It’s sentiment driven blathering. Monday is going down though. Maybe destroying out all of Friday’s gains. Thanks Delta.

      • Phoneix_Ikki says:

        As much as I hope you are right, personally I think this FOMO, Hopium, Ultimate FED put rally has some leg to go for a while, probably another leg up next week past Feb high. This monstrosity seems to have a life on its own..what will happen over the next couple of months to years will be one for the history book for sure. Sadly, this rally is just another punch in the face to everyday joe. Look at Boeing, stock back up over $200, are they going to rush out and hire all those thousands they laid off? This rally and FED bailout it’s like throwing things into the black hole, only one way in with greedy soul sucking elites, hedge funds, corporation to benefit on the other end.

        • TheMoreYouKnow says:

          Those IVL folks don’t get the exit until end of July. Just in time for the expiration on cares 1.0. The VL folks are out this week – I think. IMHO – bOEing is buying stock back with the loan/bond $ they got, or have already – and are now selling on the rush up.

    • Wolf Richter says:


      In terms of “liquidity transmission,” who the Fed buys from is irrelevant. Don’t get hung up on the Primary Dealers. The Fed can already buy bonds directly from companies and soon from municipalities and many other entities.

      The Fed creates funds (for example $10 billion) and uses these funds to buy $10 billion in securities (it doesn’t matter who it buys them from… the effect is the same). Those securities have now been pulled out of the market, and someone has $10 billion in cash (“liquidity”) that they’re going to buy securities with. Cash in electronic form always has to find a place to go – and that’s the liquidity effect. Now there is $10 billion in cash that wasn’t there before, and it has to flow somewhere.

      • Matt says:

        Understood. So if I’m a hedge fund with $10 billion in long term treasuries I can sell them directly to the Fed? What about me as an individual? Is it documented (and made transparent) who the Fed has purchased debt from? I understand the liquidity effect, I think the part I’m struggling with is where/how is the market place for this exchange of newly created cash for debt.

        • Monopoly says:

          All Fiat (paper money, cash) is Debt. Period.

          FED creates new Debt ( cash ), spends the cash, now the recipient is flush, most use cash to pay existing debt, but the money does flow, thus ‘velocity’ has been created. The problem is not ‘cash’ or lack of ‘cash’, the problem is when all the cash is sitting in a few hands ( buffet/gates ), and nobody else has the cash.

          So the FED endlessly creates new debt, which allows debtors( corporations) to re-cycle debt, which earns income (Fee’s) for banks, who own the FED.

          Today we’re only at 100’s of Trillions, I see septillions, and sextillions, and more coming, they’ll look back at a 1,000,000 Trillion debt as a joke. Who cares, the only goal is to keep the machine running, so that the banks are FED ( funny fed, and FED both means to ‘feed’), and their spawn can breed.

      • kam says:


        1. Isn’t the Fed’s creation of money a tacit admittance of money destruction in the economy and/or collapsing velocity?

        Steel: China’s Dictatorship needs steel for their Militarism, no different than Hitler and Imperial Japan.

        How long can China hold the Yuan/USD peg?

        Good Morning.

    • Robert Mosley says:

      Yes that’s because China has near slave wages. Let’s call it what it is. The only reason manufacturers relocate there is to take advantage of pay rates from 30 cents per hour to 3.00 per hour. How can any country in the world compete with that?

  2. Bobby Dents says:

    You have to remember, this is not a usual created recession. Traders and hedge funds hope there is no recession, so they refuse to trade as one, thus you get retail.liquidity burst. Even that, markets are even getting too frothy and the bulls began pulling out and volume crashed late in the day. Delta’s permanent closing of 11 hubs shows, yes Lucy there is a recession.

    • doug says:

      One of the 11 towns is New Bern NC which is not a hub. They had a few flights to charlotte daily. I imagine they have never made money on it.

    • Willy Winky says:

      There is more….

      United Airlines to close cabin crew bases in Hong Kong and other cities

      Some 319 employees will lose their jobs in Hong Kong as the Chicago-headquartered carrier plans to shut down bases from October 1.

      Cathay Pacific to lay off nearly 300 cabin crew in US

      Cathay Pacific will lay off almost 300 employees in the United States and close its cabin crew bases there, in its biggest cutback of employees

      Air New Zealand announces 3500 job losses due to Covid-19

      If the airlines thought that a recovery was in the cards they would not continue to be downsizing like this.

      41% of the kiwi workforce is on wage subsidies.

      In Canada 44.5% have applied for emergency support.

      I think it’s nearly 50% in the US.

      Massive numbers of mortgages are on total payment holidays or on interest only.

      Interest rates are at or near record lows globally.

      This is why things feel sort of normal.

      Some people are investing believing this is as bad as it is going to get so may as well ‘buy the dip’

      To me… it feels like the calm before the hurricane.

      • Hunger Games says:

        Hey Buffet sold all his airline stocks. What else do you need to know?

        Remember this guy was super bullish forever on Delta Air.

        Now he say’s that all airlines are toast, and not coming back.

        I seriously see this, with the coming Gates ‘Virus Passport’, only those who can $10K USD throw-away money, even consider to buy a ‘v irus-passport’ which is a ‘certificate of 1%’, which every authority on earth will give respect, those not holding this ‘pass’ will be treated like cattle, even if they’re allowed to travel. Even elite children in NK, Venezuela, and Syria are being approved. The COVID-19 is the one thing that never brought the earth 100% united for the elite-owners.

        Given the New World Order, I can only see a few highly-specialized airlines surviving, I’m sure that one that offer’s “Hunger Games” type of destination resorts will be the next ‘Microsoft’ or “Amazon’

      • Wisoot says:

        If the airlines thought that a recovery was in the cards they would not continue to be downsizing like this.

        So what you are saying is every country running high polluting airlines recognises pollution realisations from lockdown self evident and necessitates change towards activity reduction yet this article displays a country continuing to pollute exceeding demand. Last time I looked it was a shared atmosphere.

        A strategy of having all your eggs in one basket never ends well. An Earth with steel production exported out of one country is risky, pollution is increased or maintained while every other man and his dog in the world reduces pollution. The fact that the Olympics prevented activity to reduce pollution speaks volumes.

        To suggest 6 out of 8 largesr steel producers are China companies controlled by China Gov doesnt ring true for me (article suggests two China companies are independent of Chinese law) as Chinese law states if you do business in China your company is an open book to Gov. Therefore by default Gov controlled.

        • char says:

          But the same is true of the US or EU. If you are doing business in those markets you are by default gov. controlled in those markets.

    • Bob Hoye says:

      No recession is “created”.
      They happen naturally.
      Following the yield curve inverting.
      I have the curve back to 1860.
      And every inversion was followed by a recession.
      The curve inverted last summer.
      The recession has likely started.

  3. MCH says:

    Well, China is dominating in the steel battle space, to use current parlances. And like the telco equipment space, it has had a national strategy for a while.

    It would be interesting if Wolf puts an article together to show which major markets China is dominating in now, and which one it is coming up in.

    For example where does China stand in terms of total active pharma ingredient manufacturing. How about camera module production? Circuit board production?

    I would think there are real statistics somewhere, and places where China are not ahead can be identified largely through areas where it is importing heavily, for example chips.

    It would be interesting to see the effects of nationalized capitalism. And quite terrifying.

    I remember years ago when I was looking at the sequencing market there used to be a page that showed the location of all of the Sequencers made by Illumina, the highest concentration of those machines was located in Shenzhen, where BGI was headquartered, the BGI which is functionally the largest competitor of Illumina in that market.

    • Wisoot says:

      After the chip patent fiasco with disappeared planes and employees, China upped their controlof port container strategy via blockchain software technology. Controlling the supply chain would mean China has global control obviously not their intention but a nice side effect.

      • VintageVNvet says:

        China’s ”port” strategy is all about being able to unload approx. 75,000 CE per day in USA alone,,, and with the expansion of their army to 8,000,000 a few years ago,,, they can unload at their leisure all the ”boots on the ground” anywhere they are needed within a few days of a decision to do so. Figure, easily, 40 troops per container, and you get the ROM of that ability.
        To think otherwise is to continue to bury our collective heads in the dirt as we have been doing so well since USA was first sold out to China beginning in 1974, expanding HUGELY in 1992-2000 period, and continuing to this day, although slowed down a bit by the current pres…
        Slowed down only, far shore.
        While I used to say in the 80s, ”don’t send a nickle to China, as it will come back as a bullet,,, now they own us, so they will not need anywhere near as many bullets.”
        Please do your kids and grands a huge favor, and insist they learn ‘Chinese” languages so they can at least talk to their new owners.

        • RagnarD says:

          You need to hear Peter Zeihan’s take on China, author of Disunited Nations. Grant Williams did a Hmmminar interview with him a month or so ago. Wow, totally changed my view on China as a power. Paper Tiger, for sure.

    • Bruce Walker says:

      There are at least two markets they don’t lead in. 1 Dumbness.2 socialism’s for the elite. The USA has those markets totally locked up.

  4. Dave says:

    So what does it all mean? China producing most of the steel in the world?
    They are buying less from everyone else?
    I guess that’s a smart thing, being self-sufficient.

    • Bobby Dents says:

      Considering how much steel they use, they have little choice, though they flattened the curve over the last 5 years.

      The U.S. Is pretty self sufficient as well with Canada being it’s home grown ally.

      • Joe says:

        Prime Minister will tax it into oblivion with carbon taxes and just allow cheap, poor quality China steel flow in.

        • Bobby Dents says:

          Nope. China steel doesn’t have the quality and is useless for many forms of manufacturing. Carbon taxes would probably cause even less interest in it.

          You have to remember, steel is a low labor automated business nowadays

        • MCH says:

          @Bobby Dents

          But the cost still matters to a lot of people. Even if the track record is not good. The bay bridge between SF and Oakland has a lot of critical steel components from China. I recall that at least some of it had serious issues. We of course don’t hear about it any more after four or five years, but back then when we had to spend more money to fix the problem, it was a major news item.

          I’d love to see what happens when someone slaps a carbon tax on steel, especially given the content of that steel, but doing so will invite carbon tax going the other way. May be not on steel, but I’m sure most countries have some exports to China.

        • Paulo says:

          Nothing wrong with a carbon tax as it is recirculated into the economy. Canada can smelt everything it needs with excess hydro renewable clean electricity which is the point of it all.

          As for being a home grown ally to the US, that went away with the steel and aluminum tariffs.

          This period on our history has everyone scrambling to look after their own interests thanks to protectionism. As for Chinese steel and fabrication, buyer beware. Local example Victoria BC Johnson Street bridge fixes.

        • Joe says:

          In Vancouver, BC, Canada, they had the same problem and had to wait 8 months for another beam to be made and shipped. But it was okay, the citizens had to cover the delays and cost overruns.
          Too many incidents of this where they went ahead and incorporated it into the structure.

        • MCH says:

          Steel is like telecom in a fashion, it’s just taking more time. In the telco equipment market, in 1997, Huawei was a little nothing company that was more of a copycat and an importer. But because they were willing to undercut their competition in prices and go to markets that were too cost conscious (think Pakistan and the likes) they were able to gain a share and cycle up. Back then, I remember people saying how Huawei was a piece of S*** company that couldn’t innovate if innovation dropped into their laps, I don’t think they are saying that any more.

          Eventually the same will be true for the Chinese steel companies. The difference is that they are willing to undercut everyone to grab market share, and improve over time. The reason that there are still so many of these state owned companies is because they need to support employment in those regions.

        • Debt Wazoo says:

          > Back then, I remember people saying how Huawei … couldn’t innovate if innovation dropped into their laps, I don’t think they are saying that any more.

          I still say that.

          Huawei doesn’t innovate.

          They wait until a technology becomes a commodity, and then they overwhelm the competition with size and scale. In fairness, they do an outstanding job of executing on well-understood, mature, commodity technologies.

          They can’t innovate worth shit.

          Technological would grind to a halt if everybody decided to imitate Huawei’s approach. This is not scalable.

        • MCH says:

          @Debt Wazoo

          I’d look at their 5G tech and respectfully disagree. I look at what they are doing in smart phones, and I think Apple and Samsung should be glad that the US put Huawei on an entity’s list and is specifically denying Huawei access. And Cisco should be so grateful that the US government started protecting it in the late 2000s.

          Yes, they did what you said, but after they killed everyone except Ericsson and Nokia in the telco space, they had to innovate, because they had no one else to steal from.

          This is why they are #1 in the space. Yes, they had support from the Chinese government. (hint, so did Boeing, Lockheed, Raytheon, etc) The only difference is that the Chinese government sees technology as a space where they can’t afford to be dependent. The US under Clinton but mostly Bush were too stupid to care. And by the way, it’s funny how we complain about Huawei stealing tech, and at the same time so many of the same people celebrate guys like Steve Jobs, even though he outright stole the ideas for the original GUI for Macs from Xerox PARC

      • VintageVNvet says:

        You have it correct re quality of china steel, and this has been true for many decades.
        Remember well the first times the A325 bolts started to fail with far less than their rated loads, (early 80s maybe?) and finding all the failures,,, ALL of them, were made there…
        If you want cheap cheep cheep, buy cheapest you can find, and now that will always be from china…
        If you want good, or at least to specifications, buy USA or EU, and esp German…
        Similar on SO many levels for SO many products besides steel.

      • Portia says:

        The first I knew there was a steel problem in the U.S. was abut a year ago when I tried to buy stainless steel screen at a hardware store. The child tried to sell me aluminum screen as SS. Then they said they could not get it. I went online, but could only find lab-type screen. I needed non-reactive screen for seed sprouting, just regular SS window screen. Still wondering where it can be found. [fiberglass will not work]

    • Brant Lee says:

      Maybe we shouldn’t use the same term to define China steel and say, German steel. If you’re producing cheap junk for Walmart, China’s steel is sufficient. Maybe some have heard of bridge failers in China due to, gosh, the steel sure looked like good steel. Does anyone want to visit the 101th story in a Shanghai hurricane? The Chinese in a lot of cases just cut too many corners.

      • jj says:

        You are absolutely right, they have no integrity. Its the Dolla, Dolla how much you give me & i give you cheap (cheat)….
        Not good to do business with them. They will knif you in the bank sheet.

        • Dave says:

          >Huawei doesn’t innovate.

          They wait until a technology becomes a commodity, and then they overwhelm the competition with size and scale. In fairness, they do an outstanding job of executing on well-understood, mature, commodity technologies.

          They can’t innovate worth shit.

          ***Technological would grind to a halt if everybody decided to imitate Huawei’s approach. This is not scalable.

          I guess the Chinese waited for Wall Street to master financial alchemy. The Chinese government and businesses don’t have to innovate they just copy Wall Streets’ financial alchemy and do a great job at it! I guess the financial system would grind to a halt if everybody decided to imitate Wall Street and Chinas’ approach!


      • Denise says:

        You can really see the difference between Chinese stainless and German Stainless on deck hardware and stanchions on sailboats. Our German made Hanse has top quality deck hardware that still looks like new after 15 years. Those boats made with Chinese made stainless were junk after 7 years.

    • Stuart says:

      The USA has undergone a deliberate de-industrialization in the last forty years. Infrastructure is approaching Third World status in many parts of the country. Why has this happened ? Millions of jobs would be created if infrastructure was to be rebuilt. Steel production would soar. The depression would end. The economy would turn from “ financialization “, an obscenity, to the real world where many social problems would fix themselves and a world of hurt would lift from backs of the Working Class. The Ruling Class did this to us and needs to be put in their place. They have done enough damage.

      • Debt Wazoo says:

        Dude, the Chinese contractors would underbid and win all those infrastructure contracts.

        Massive wealth transfer from taxpayers => China.

        Remind me again how this is good? Oh yeah right.

        • MCH says:

          China is an easy bogeyman. The fact of the matter is, the US needs to fix its own problems, we have heard about infrastructure spending since Obama, it’s an easy bipartisan win, and all the other platitudes. Yet, nothing has happened, the liars in DC need to be held accountable, but they are all too willing to serve their own interests.

          Fine to blame Chinese government for certain things, but let’s not throw too many stones from our glass houses.

      • Miatadon says:

        I agree. I think the major cause of the race riots in the US were due to all the young unemployed blacks with no prospects of ever having a decent life, never gonna have decent jobs that pay well and allow them to raise a family. Our manufacturing base has been hollowed out, and that includes steel production. De industrialization of the US has left us as a police state 3rd world nation.

        • Dave says:

          If you look at the numbers, there’s a lot of unemployed or underemployed minorities, millenials and women. It’s broad based. When everyone is busy and have money in their pockets, it covers over a lot of problems. It’s class warfare.

        • Kent says:

          Why would re-industrializing the country make a difference? I never understand this argument. If I own a steel mill, why would I hire a guy and pay him any better than a waiter in a restaurant or a Doordash guy? Is a guy standing on an assembly line pushing a button to send a slab of steel down a particular path higher skilled than a guy carrying five plates of food through a 50 tables?

      • Nick says:

        Minnesota us losing its only steel mill in the state next year. They are laying off everyone. 250+ good paying full benefitted jobs going up in smoke. Highest costs of energy anywhere in the country. Difficult union labor environment, heavy handed and very expensive environmental regulations. This reverberates throughout the entire local economy. So many small and state and local businesses support a steel mill.

    • Paulz2 says:

      China is the low cost leader in dumping steel of various grades and pushes down prices in the market by acting through its many subdivisions and wear-houses. I remember reading this during the last glut at zerohedge around the time of the GFC. This was done through a maze of subsidiaries who had wear houses across SE Asia so it was difficult to trace who was dumping steel.
      China now has the capacity to produce large custom moldings which is not available anywhere else which is used for the pipeline industry and various other special projects.

      From FactSet last week some bond ETF is starting to list on shore Chinese locally trades bonds starting at 4% of the ETF and will be allowed to grow its share over time. This was a stunning landmark as those bonds are toxic waste that is likely to blowup at anytime knowing what Wolf has written up on their accounting standards. It has already happened on Asian developing market ETFs where I think you cannot find Chinese content <4% when I last looked a while back maybe a year ago.
      So it appears the Chinese are trying to get free access to capital in the west or anywhere they can dupe people to allow them raise capital to build there government controlled leading companies and force dependence on them and using it as a political tool against of countries if there is a political difference. This has already been done to Canada, Australia, and New Zealand the latest. The 5 eyes intellengece group of nations knows about it.

    • Willy Winky says:

      It takes a lot of steel and concrete to build ghost cities!

    • oil and steel says:


      Well just a few weeks ago you had to pay $40USD a barrel to have oil hauled away, as the futures price went negative.

      Now we’re hearing there is a glut of steel, but nada to worry as construction in Israel & China ( all China owned ), the Silk-Road with bridge-heads in Vietnam and ending in Haifa-Ashod Port in Israel are of the highest priority in CCP ( Chinese Party Owners )

    • Francisco Martinez says:

      China agrees several years ago to scale back as they are the behemoth of steel making in the world. So long as China keeps making steel above their capacity which they usually do they will sell with the intent of dumping in the global market thus making it difficult for other nations to compete and make fair earnings fo all involved. Steelmaking can employ significant amounts of people and rhats why China does that as much as they do. AND, they’re not concerned with their carbon footprint. They are so far behind on their environmental efforts to be responsible as a global participant of carbon emissions. So long as they do that and sell so cheaply everywhere including North America they will be a threat to the rest of the world.

  5. Trinacria says:

    As pointed out in the article, China uses the steel for a myriad of purposes. My question is does China also use the steel to build empty/ghost cities that have been publicized over the last several years and, IF SO, what has/is becoming of these ghost cities and, are there consequences for building these ghost cities?

    • Thomas Roberts says:


      In China local and regional governments are given quotas for what next year’s gdp will be, beat it or else.

      And so construction and steel are among the easiest ways to create gdp on demand. Build a bunch of buildings or even entire cities, even if they won’t ever be used. Next year, build some more. The government can and does level anything it wants and resells the land, this is a major source of government money.

      I have seen a couple of ghost cities from the train, other than the skyscrapers, which are usually residential, there is not much to these cities. They are often laid out in a way that is counterproductive to actually being used. They are often placed far enough away from real cities that it’s obvious, there is no intention of it actually being used. Because, the government doesn’t want to spend money on them, there is little infrastructure, which might not even be capable of supporting the buildings there, it’s mainly a couple roads.

      In China, even in the best cities, most buildings are built extremely poorly, faulty cement is often the biggest culprit. And so, those buildings can stand for a while, but, many of them could literally collapse in less than a few years after construction. As China isn’t going to let foreign inspectors figure out how many, it’s very difficult to tell even in the best cities, just how bad the situation is. This situation ramped over the last 10 to 15 years. Unused buildings and ghost cities can deteriorate and become condemned, until, eventually, the government knocks them down.

      The issues with building them is mainly that it’s a big waste of money and resources. China is mostly resource poor and must import most resources and is wasting it on stuff like this. The situation spiraled out of control, because, every year, you are given a gdp figure, which over time became increasingly impossible to meet. Especially, considering last year’s gdp and the year before that was fake. It does employ people though.

      The money for them, largely comes from middle class families. In China a middle class family can usually save a lot of money up, so where to put their money? China puts a limit on the amount of money you can take out of the country each year and so if you aren’t a high enough member of the ccp you must store it in China somehow, as they try to prevent average people from taking anything beyond vacation money out. Their stock market is a scam, even the average Chinese person knows that. Banks aren’t guaranteed “the ccp controls them and may take your money at will”. You cannot invest in businesses, unless you are a high enough member of the ccp.

      And so investing in real estate, is the only way Chinese can store or invest large amounts of money. Ghost cities are on the decline we think, because, most people realized what was happening, and so they are mostly building and investing in real cities. However, this has caused the once cheap and affordable Chinese cities to have the cost of housing to skyrocket out of control. This has caused the price of everything to go up and cause China to become increasingly uncompetitive, to the point, where for at least the last 5 years and ramping up, foreign factories have been relocating to outside China. Even in real cities though, alot of new buildings are grouped together like little ghost towns that may fall apart in a few years.

      The ccp has 90 million members. And there is a hierarchy.

  6. The pattern here is for China to step up exports of finished steel products. Japan in the 70’s was buying our scrap and reselling it to us, often in the form of automobiles. China controls crude steel prices which drives outside regional steel producers out. They sell the US finished product below cost. Plan A: eat Japan’s lunch B: attract US corporations like GM, to work around tariffs. C: Retool for high end finished products (Tesla) D: Subcontract low end product manufacturing out on the Belt and Road. Will Americans pay more for products just because the president sets prices? China will subsume developed regional economies, like Taiwan and HK, and grant autonomy to outliers, like E. China and Tibet. Steel is a last century commodity, the US is a rear view mirror society with a reactionary political incumbency. China may only be firing the cannon for effect. 5G and Huawei means a lot more.

    • Wisoot says:

      We will have to disagree on Taiwan

    • Thomas Roberts says:

      Huawei has recently been cut off from semiconductors and is dead in the water. 5G is just short and medium range cell phone towers. 5G has been in development by many companies and organizations for over 10 years. 5G cannot replace 4G, though 4G will for marketing reasons be slightly upgraded and rebranded 5G. With long range towers the max amount of data is too low for large cities and isn’t super fast (mainly latency) and also doesn’t work well in super crowded places like sports stadiums.

      Huawei got alot of China’s best minds and beat foreign competitors by a couple of years with 5G implementations, but, without access to TSMC semiconductors, that advantage has been lost. Before China has any chance of building their own semiconductors to any reasonable extent, many other countries will be making 5G equipment.

      Short and medium range towers make use of higher frequency signals, which are alot faster, but, shorter range and less capable of penetrating walls.

      It’s very important to note the fastest possible internet connection is and will always be fiber optic cables, anything faster would have to involve the use of quantum mechanics. 5G or anything wireless can NEVER exceed the cable running to the towers and will always be less reliable than a wired connection. While, 5G towers can for a few antennas support a mesh network, doing so greatly lowers the max bandwidth available and increases latency.

      5G can also never match the unlimited bandwidth capabilities that having fiber optic cables provide. There is always a max amount of data that can be sent through the air, the only way around this is making cell phone towers shorter range, but these still need wired connections.

      A single coaxial cable running to a single house provides greater speed than will ever be needed and continues to increase over time. To each neighborhood (before running the rest with coaxial), there would ideally be fiber optic cables, but 5G would require the same and be less reliable. 5G for use in homes or business might actually require an external antenna.

      Short range towers have a range of only around 1500 feet (lower in rain), but can support alot of people and is super fast. These are what the 5G marketing claims are based on. However their short range (lower in the rain) and very weak ability to penetrate walls means they are only good for super dense places like sports stadiums and certain places like parks. Whether, these places having great internet is a plus is another question. A few cities have been trying to use them for houses, which is unreliable and ridiculous.

      Medium range towers are farther behind in development and are far better. These towers are what you might actually use on a daily basis. They will greatly improve your phone internet connection and possibly your tablet or laptop if you are out and about, but they will never replace a single wire running to your house.

      Self driving cars, if they do communicate wirelessly, would for security reasons have to communicate to central locations and would use medium and long range towers. If they communicate directly with each other, they would probably use something unique, possibly with special lights or something like that. 5G isn’t necessary.

      Other wireless technologies like WiFi can use similar high frequency signals to 5G and compete in certain uses, but, are farther behind in development.

      Despite alot of nonsense marketing 5G is not going to change things, it just makes internet faster for our phones and in certain situations for some other things. It may or may not be used for self driving cars. It might in certain places be used to for instance, connect different very close buildings together in a mesh network if part of a single property, but, will likely compete with Wi-Fi and cables. There are other niche applications, but, most aren’t very important. It might be used for a small number of homes and business who are located far apart, but that’s about it. There are other technologies like sending internet over the powerlines that may compete in these areas as well.

      • MCH says:

        Beg, Borrow, Steal… that’s how a business goes about winning. This is not different for a US company vs a Chinese company. The big difference is that the Chinese company will occasionally (or more than occasionally) have state backing, where as the CIA will not both to steal the latest AI software from a Chinese company and then drop off the info at Google. (a side effect of not wanting to pick winners in the free capital markets)

        I think Huawei is well aware of its weaknesses, it copied the Apple idea of designing its own chips with HiSilicon. It knows that it could be hurt by the US so it stockpiled chips and other critical components. It turned to its own homegrown OS when it became apparent that Google was going to cut it off, yes, right now the OS sucks, but Huawei has been at that position before. (and underestimating China in terms of homegrown technology is done at one’s own peril, remember, this is where gunpowder and block printing came from, centuries before it went to the west) One should never underestimate an adversary with a set of assumptions based on the last couple of decades.

        The fundamental thing about Huawei is whether or not it can replace Ren in the long run. Ren is basically the driving force behind Huawei. His ruthless implementation of the wolf culture is what has been driving Huawei forward for the last 20 years. They have a mandatory retirement age of 45 for most workers, because they figured if you couldn’t be a leader by then, you’ll never make it.

        Huawei has picked youth for innovation, and trusting that those do make it over the 45 mark are going to be good enough to leverage their experience to train up the next generation of leaders. It is the basics of meritocracy but with ruthless execution, with a diamond ceiling for retirements of middle management.

        Ren is a product of his military training, and he apparently has lived a hard enough life to appreciate the fact that he needs to always innovate. He has instilled a certain culture in Huawei, but whether that can produce someone in the same vein as him to come up in Huawei remains to be seen. For all of the talk of culture, the problem is that culture does not necessarily produce the next leader. Look at Apple, Jobs put in place a culture, but that culture at Apple as morphed, and it will never produce the next Steve Jobs at Apple as long as someone like Cook is in charge, and if Cook would kick the bucket today, his replacement will be another operations guy. Apple essentially doesn’t have a bench of innovators ready to take the reins.

        If there was an equivalent of Jobs in the US right now, it’d be Elon Musk, and he doesn’t work at Apple.

        • Thomas Roberts says:

          Huawei didn’t make a new OS. In order to get smartphone makers to use Android, Google had to open source almost the entirety of android. All Huawei did was to take an almost complete os “Android” and make a couple of apps for it and put their branding on it. That’s it, that’s all they did. They have managed to screw up it somewhat though.

          There has been very little innovation in China, DJI and Huawei are mostly it. China has stolen through a variety of means alot of technologies from around the world. China doesn’t innovate enough for them to claim anyone has stolen anything from them. China innovates less, despite its massive population, than Taiwan or South Korea.

          5G has been in development by many organizations for over a decade, Huawei isn’t needed. It beat everyone else by a couple years, but that’s it. After medium range cell phone towers are out, there’s not much left for smartphones. The only significant things left are to make it super strong, so it doesn’t need a case and make the battery last longer.

          Designing chip layouts/architecture is not difficult. The real technology lies in the machines, which, produce semiconductors.

          Most electronic fields are reaching their end game and China missed the party. Over the next 10 years, most electronic devices will be as good as you ever need (or can tell). And within 20 years most technological endpoints will have been reached as far as electronics go.

          Huawei will never compare to Apple. Large companies aren’t a 1 man show, while the leader(s) can make a big difference, there are thousands of other employees.

          As far as AI goes, China has, despite a large investment, never demonstrated any advancements in the field. I did study computer science at college and I can tell you the whole field (artificial intelligence) is currently underwhelming, it mainly boils down to something resembling statistical methods and forecasting. It can still be useful, but, alot of breakthroughs will be needed, before it becomes the game changer some think it already is. True AI could transform the world, nobody has made much progress. Alot of people both paid and hobbyist across the world, are trying to make those breakthroughs. Almost everything in the field is open source, except, for specific proprietary corporate formula implementations.

          Both AI and automation are likely to be detrimental to China, because, it reduces the value of transforming raw resources into finished goods. And China is resource poor and population heavy.

          The other major technology fields (that will also continue to advance for a long time) like healthcare, China has shown little advancements in.

        • MCH says:

          Interesting, you say a company isn’t about one man, or large companies isn’t…. Apple would beg to differ, without Jobs, it wouldn’t exist today. You can say the same about Tesla, or SpaceX… even Amazon. Without Ren, there would be no Huawei.

          The chips are fundamentally about the equipment, and China cannot do what Canon or Nikon or ASML can do. But you would be surprised at how hard they have tried to replicate those capabilities. Eventually they will succeed.

          As for DJI and Huawei being it… I don’t know, have you seen what Tencent has managed through Wechat, or all of these companies focused on surveillance?

        • Thomas Roberts says:

          Wechat hasn’t accomplished anything. In China, because, the CCP controls everything they push everyone to use specific Chinese services. This allows them to become very big, before they have to compete on the international stage. It also gives them certain advantages, like how everyone used to use Facebook, because that was the one service everyone had. China is hoping, that because of their large population, if they force their population to use certain services, that would by extension, force other countries to as well, because, it would be the one thing everyone used.

          As for the services wechat provides, its nothing new or particularly special, anyone could make such an app, the hard part is getting everyone to use it.

          As for Ren, it’s known he is a high ranking member of the CCP. Is he essential to Huawei? I doubt it. Again in China, they stole alot of technology and can force their population to use certain brands and services. Some people like Steve jobs and Bill Gates helped built the electronics industry as it is today and made their companies, what they are. Although, these kinds of guys can push things forwards (speed things up). They aren’t essential. Ren isn’t one of them.

          Already TV’s are almost as good as you could ever physically see, within 20 years, almost all consumer electronics and most non consumer electronics will have reached the end. By the time China catches up, it won’t matter. The prices will crash, just like tvs have. Once phones reach the end and cannot be improved anymore the price for a high end phone will probably be between 100 and 200 usd (adjusted for inflation), maybe less. The profits of everyone combined, who made that phone would probably be under 20 usd or something like that. And people won’t replace them every 2 years. They might wait 6 years or longer, as there would be no difference.

  7. GotCollateral says:

    > China uses most of the crude steel it produces at its factories …

    Really? A decent chunk of it isn’t just sitting in idle because even internal demand for building it in china has fallen (less ghost projects)? Got any numbers on this that can differentiate stockpiling vs actual end usage?

    • Wolf Richter says:

      Steel goes into bridges, cars, trucks, high rises, AC ducts, air conditioners, washing machines, certain types of shoe soles, pots and pans and flatware, rails, trains, ships (gosh, it takes lots of steel to build a container carrier), tanks and other weapons…. Steel may be the single most important material in modern society. Sure China is stockpiling some steel, just like they’re stockpiling crude oil, and other commodities.

      • GotCollateral says:

        So, no easy place with any numbers regarding stockpiling vs end usage… i’ll keep digging around :/

      • Dan Romig says:

        I would add that steel is also one of the most diverse set of materials and commodities.

  8. Kenny “Ingot” Logouts says:

    I’m curious just how much steel is produced vs 10 and 20 years ago.

    I’d expect to see ingots just kicking around on the side of the road, or TVs with metal slabs stuck on the back, or or or.

    Where is it all going?

    • Wolf Richter says:

      “I’m curious just how much steel is produced vs 10 and 20 years ago.”

      Look at the second chart. It’ll tell you in million tonnes (Mt).

      • Kenny Logouts says:

        Sorry Wolf, I’d meant consumed.

        As char mentions though, China are just big growth consumers.

        But it clearly won’t keep going up from here, unless China starts filling Africa with metal things.

    • char says:

      20 years ago they made a million cars a year. Now it is 20 million,
      They are now the biggest shipbuilders in the world but not 20 years ago. There it i all going

  9. waxer says:

    Good article. I am short MT stock, it has a bad debt problem. I think China will just continue to dominate industries like this, if pollution gets bad they can put more factories in Western China where no one notices as much as East Coast China.

  10. DeerInHeadlights says:


    Why don’t you have a section on the website for media appearances? I watched you on the PeakProsperity piece last night and it was informative for me. Folks here would have had no idea you were there if PP wasn’t on their list of places they frequent. Just a thought…

    • Greg Hamilton says:

      Thanks for pointing Wolf’s appearance on Peak Prosperity. Just watched it, and as you said very informative.

      • sammyiyer says:

        Deer /GH
        I just watched wolf’s interview video at pea kprosperity. putting a face to thechief here was nice. I have heard about that site site but never went there till now. Peakprosperity ‘s COT report on gold & silver is very useful to me as I trade silver daily 24×7 at MCX commodity exchange in India . MCX is smart to pull in all speculators addicted to precious metal trading (gambling) They have full silver contract(30kg), SILVER mini (5kg) & silver micro (1 kg ). silver & gold in India mimic global prices (apart from USD/INR fluctuation)

    • mtnwoman says:

      Yes, the Peak Prosperity appearance by Wolf was appreciated by the financially less literate (like me). Taggart would recap Wolf’s ideas into more understandable bites.

  11. DR DOOM says:

    Once upon a time we were told that China’s fate is to toil away 24/7 to make stuff for our consumption. Without our consumption China is dead . We were bestowing purpose on the hapless . The Chinese are wily, shrewd and lie about everything including the time of day if asked. Steel production is another lie. Even if they could make that much the commie goverment would dump it in the ocean if they could not dump it on the West. We all know how the Chinese went to Congress and strong armed that August Body to move the US manufacturing base to China and hand over our secrets . How could Congress comprehend where a 51% sponsorship would lead ? Our Captains of Industry were on their hands and knees begging Congress not to force them to manufacture in China. The Captains of Industry said it would shatter the American Middle Class and create a great disruptive transfer of wealth. It would cause income disparity and will lead to rioting and grief . Alas,the great Captains lost. Congress ordered it to be written and let it be done.
    Well, let’s not get lost in that fairy tale . Fact is that only 4% of China’s GDP is imported to the US. That 4% ends up multiplied many times over in our Finacialized Service Economy before it is consumed. Where is the rest of GDP (96%) being consumed ?Pundits like Andrew Chaing and other neo-cons make claims the other 96% is a commie illusion, a fraud. Their narrative is that China is in permanent collapse and will be gone . The neo-con never give details on what China Gone looks like but want you to focus in stead on the narrative Of China Bad . When the neo-con is pressed on details of China’s Perpetual Economic Collapse they pivot to how intolerable China’s authoritarian centralized communist goverment is and call you a pinko commie sympathizer. We do the same in the case of Russia. Perhaps both Russia and China are making Steel because it builds things,useful things. What have we built lately?

    • Joe says:

      Rather than keep spending on the same products that take massive manpower. Both Russia and China waited for these to get old and obsolete.
      As drone and computer technology advance, their are also areas that the defence department missed such as under the ocean and not needing people in subs any more that our bodies can’t withstand.

    • Paulo says:

      Good comment Doctor D.

      I always remember the stories and photos of Chinese peasants building airfields with shovels and wicker baskets. Or, Russian serfs being bought and sold with the land. The neo-cons can demonize them all they want but it remains fact. Their recent misery is quite fresh and they will never go back or be subjugated again.

      US and to a lesser extent Canada hires foreign workers to pick their fruit, mow their lawns, process meat, and toil endlessly. It reminds me of the Hong Kong British hiring (tongue in cheek) peasants to cut their lawns with scissors. The modern version is Tyson meats.

      Compared to working for foreigners, labouring in an Indian or Chinese steel mill is a big big step forward. If a country has natural resources it will survive, but these folks will not be outworked. They’ll make steel and copy manufacturing methods because they can. 3D printers the new tool and die makers. I bought a carb for my 40 year old Honda MC from a Chinese supplier…..14 bucks and it worked perfectly. Where else could I buy one?

    • sierra7 says:

      Dr. Doom:
      “What have we built lately?”
      Aircraft carriers. You know. Those things that keep the dollar strong????

  12. Felix_47 says:

    Our plaintiff bar is earning quite a few Euros from Bayer with the Round Up fiasco and it is a lot easier money than running a steel mill.

  13. Joe says:

    And all of it aging with poor quality replacements.

  14. Brant Lee says:

    Japan said: “We have awakened a sleeping giant”.

    China 2025: “We can now bomb those fat lazy Americans to sleep permanently.”

    • MonkeyBusiness says:

      China does not have to do anything. We are doing a fine job self destructing.

      Sun Tzu has a saying: “If you wait by the river long enough, the bodies of your enemies will float by.”

      America is definitely not in a good position. The Dems are paranoid about Russians, and the Republicans are crazy about the Chinese. If there’s a non nuclear war, the possibility of us winning against the combined might of those two countries is about ZERO. And yeah, that will be the case even if we ask our European “friends” to join us because Turkey will surely join the Russians and the Chinese, and the Turks alone can probably defeat half the European countries without batting an eye.

  15. Tony says:

    It looks quite obvious that China is getting ready to sell to emerging markets unless they’re just going to store it and sit on it. That’s my assumption. Why stop production when the rest of the world is going to heck?
    Hey, wait a minute…did i just use the website slogan there? :P

    • MC01 says:

      China has been exporting 90-100 million tonnes of steel (chiefly rebar and cold rolled steel) per year since 2014. It may not sound like much but it’s about the same as the whole EU steel production.
      With world markets awash in highly subsidized steel even China has been struggling pretty much like everybody else to find buyers, but found a major outlet in all those development projects companies such as the China Bridge & Road Corporation are carrying out around the world: whether these are commercial ports in Kenya, highways in Montenegro or government buildings in Ethiopia, all building material and equipment used are made in China.

      There’s another thing though: while we take China’s numbers at face value as our usual there’s an enormous number of bulk carriers moored in front of China’s ports waiting for orders. This hints that either bureaucrats in Beijing are up to their usual shenanigans or that steel production in China will take a major hit down the road.
      A bulk carrier leaving Ningbo right now would reach the gargantuan Vale terminals in Tubarão around the July 21. Give it about a week to fully load (assuming a Valemax or similar vessel size and normal operations in Brazil) and then it’s another 45 days to Ningbo. That means that high purity Brazilian iron ore will be offloaded in Ningbo in the first half of September, again assuming everything is going smoothly.

      There’s something fishy here.

  16. David Hall says:

    Nucor (USA) took scrap steel including junk cars and smelted it in electric arc furnaces. Other steel mills used iron oxide ore and coking coal to produce steel.

  17. Cobalt Programmer says:

    India’s plunge is not due to recession or economic indicator. There is a forced quarantine (or like curfew) because of COVID situation. Once the quarantine/curfew is lifted all over India, production will be up (with a little delay). The poor laborers who work in the industries that uses steel are all sent back to their own homes/villages and towns. I guess these companies will have a hard time to hire laborers after the crises is over. I heard of poor people walking/biking >500 miles because of the COVID. If someone told me back in 2019, that a laborer have to ride a bicycle all their way back to his home for 500 miles, I would have literally punched him in the face. Who knows, may be blame it on Jupiter retrogression and get ready for the good times…

    • Wisoot says:

      Anyone might wonder why China and India dont work more closely together considering they share many governance issues in common.

      • Shawn says:

        Well, for starters, one country is a democracy the other a dictatorship. Both are armed with nuclear weapons and they share hundreds of miles of a heavily militarized disputed border. India is also moving closer to the United States, Australia etc. Maybe that’s why…

      • Nicko2 says:

        You might want to look into China/Indian military maneuvers up in the Himalayas. All is not peachy.

        • Cobalt Programmer says:

          China and India were the largest economies in the world before European imperialism. Unlike European countries like France and Germany, there were no actual territorial disputes or exchange of ideas between the two countries for centuries together. No great king of India, or anybody from Huan dynasty wanted to fight because they are far far away in terms of their race, ideology, geography and resources. Even though connected by land, there is a very big mountains and very empty tibet between the two countries. Very difficult to cross. As chinese claim, they do not have any historical presence in the areas. Because the terrain was inhospitable for anyone in the olden times.

          The border skirmishes are due to a simple fact. China wants to build a road that connects to Pakistan which will open sea port into Indian Ocean. Already Chinese are in Pacific (history and current). The alternative pathway for them to enter in to Indian ocean is through SE Asia who are against China. If they get the road via Pakistan, they can easily dominate the Indian ocean countries, ME and Africa. However, US don’t want that. India also do not want this or any fight with China (1962 was an exception).

  18. MiTurn says:

    Steel is made from iron ore. From whom is China importing it, as I assume they they don’t have enough to be self sufficient. If so, what countries’ iron ore exports are setting records?

    • hidflect says:


    • California Bob says:


    • Debt Wazoo says:


      • California Bob says:

        Great minds think alike.

        • Shawn says:

          Given an impending cold war, I wonder if China is building up it’s stockpiles of steal, just in case.

        • California Bob says:

          “… I wonder if China is building up it’s stockpiles of steal, just in case.”

          Freudian Slip, or sly innuendo?

    • Fat Chewer. says:

      Yeah, Australia. Our gov only cares about corporate welfare and nothing else. They sold their souls to Murdoch and Co years ago. We call them a fully owned subsidiary of News Corp. As Midnight Oil said in 1984, “Who can stand in the way, when there’s a dollar to be made?”

  19. Augusto says:

    China just wants to keep its citizens (prisoners) busy, in case they start thinking the Glorious Leader ain’t so glorious. They can pay them in fake money (Renminbi -electronic BS), and the steel is piled somewhere. A version of moving a pile of rocks from one place to another, except, if they can get any real money, no matter how little, from anyone outside China for that pile of rocks/steel, well its “sold”. What a waste of country’s people and resources.

  20. sierra7 says:

    I do know this:
    Every piece of “metal” that I’ve purchased that is/was made in China has fallen to rust only after a few years. How this has happened to so much of our construction material is beyond me.
    As a native San Franciscan (moved away many years ago, but…”my hear still belongs to SF”) I was sick when so many essential parts of the new Bay Bridge began to fail when that structure was re-designed/built.
    How have we ended up in this appalling situation.
    Major political corruption has to have been involved.
    Totally disgusting!

    • sierra7 says:

      Edit: My “heart”…….

    • 91B20 1stCav (AUS) says:

      Sierra-would venture that aside from ‘major political corruption’, major MENTAL corruption was involved, i.e. the seeming arrogance of many government/industry management MBA’s who never spent a day on the engineering/factory/construction implementation floors of mission-critical industries, whose only concern (as mentioned by several above) is price (my blood, too, ran cold when the use of Chinese bolts in the new Bay Bridge was revealed). Can’t blame them too much, though-I too-frequently meet folks from all walks who believe the fruits of technological civilization are an always-perfect given, with no knowledge of how to judge quality of a manufactured/constructed object.

      And, may we all find a better day…

    • fajensen says:

      How this has happened to so much of our construction material is beyond me.
      What one doesn’t specify, one doesn’t get! China can make everything as good as “we” can, if “we” pay what it costs (and have some incoming QC).

      When they are asked to deliver a 20 USD part for 6 USD they will do that to the best of their ability including the paperwork. Of course it won’t be the same actual quality. But, “the loot” here will be 14 USD more per part (and maybe even 40 USD per part to change it to the right thing later).

      Because, the current business culture, especially within con-struction, is to invest in The Contract. Thus shielded, they get to do shoddy work with substandard materials and then, according to the contract, they will get paid once again on the “change orders” to fix their “mistakes”!

      Or Else, if the project manager doesn’t like that proposition, those con-tractors will get paid “in-kind” with human sacrifices on the arbitration dragging out forever, or until a more flexible project manager is found.

      Been there, done that!

  21. LouisDeLaSmart says:

    The capacity to process such quantities of steel comes from large Iron ore supply. The biggest iron ore suppplier is Australia. They have taken their opportunity serious, and set petty politics asside in favor of mining. Since China is highly resource dependent on AUS, they will move in lockstep, and as long as one has it good, so will the other. For how long they will be able to play to the tune of two flutes, military-political support to/by USA and economic dependancy on China, I don’t know.

  22. Shawn says:

    They are modernizing their navy the PLAN since 2005. They are supposedly make a 5th generation fighter but many call it a 4gen++ which can not even compete with the Russian Su-30 export version acquired by the Chinese air force. If you look at the armament of just two US navy ships, the USS BARRY and the USS BUNKER HILL, both recently sailed through the Taiwan straight, those two ships alone could probably take out half the Chinese navy single handely.

    • MonkeyBusiness says:

      Missiles render navy ships useless, and the last time the Chinese fought us it ended in a tie even though their air force was negligible and their navy was laughable.

      The Taliban didn’t even have any air force and navy, and how about the Vietnamese. They whooped our asses all the same.

  23. Whatever says:

    Great article. But the Chinese are simpleton barbarians who only imitate in West on the surface. They are grossly incompetent. But the people running the Western media are the same people invested in China so they are going to talk their book about how great China is and what a great competitive threat to the West they are (ex. Ray “disingenuous” Dalio) and how they are future which is crazy because their very culture in the embodiment of stuck in the past and of participation trophy conformity. They are superstitious and backwards and are being used by Western banking cartel until they are done with them and off to the next host to leech off of. Just like the Saudis soon they will be left poor in the dust when the tide turns and outside money leaves.

  24. Ishkabibble says:

    Imagine first that every human being outside of US borders suddenly ceases to exist.

    Imagine that the present system in the US in which the vast majority of wealth and LARGE-SCALE capital equipment is owned by a microscopic percentage of human beings for their own astronomical profit REMAINS THE SAME.

    Imagine that both “labor” (the working class) and “management” (the ruling class, or Elite) can organize, as they supposedly can in our present “democracy”. But now, because nobody is alive outside of US borders, the owners of large-scale capital equipment no longer have the option to move their capital equipment to other places on the planet where there are desperately poor people who are “willing” to work for food, water and a place to sleep on the factory floor.

    Imagine that US evironmental, labor, etc. regulations apply, now, everywhere on planet earth (because the US is the only nation on planet earth).

    Just exactly HOW are “Americans” going to “go it alone” when America’s presently-designed economy needs immigrants (of a certain “economic type”) each and every year from now to eternity?

    WHO is going to buy all of the “excess” natural resources, oil, farm products, manufactured goods, etc. that a small percentage of working Americans can very efficiently produce, but can no longer “export”? NOBODY.

    To have available the relatively small amount of warm-weather items that America now imports, Americans will venture forth to those places, AS AMERICANS, and produce and send those products “back home”. Naturally, those American workers working on other parts of the globe outside of FORMER US borders will be paid a wage that also applies to the rest of the American “labor market” and, again, the American regulatory framework will also apply to those workers and facilities and places of production, as well as America’s social benefits.

    ALL of the work that is presently being done in America by “temporary foreign workers” and other temporary workers who harvest crops, put roofs on houses, cook food in restaurants, take care of the elderly in nursing homes, etc. will have to be done by Americans who will be paid by other Americans.

    Automobiles, trucks, TVs, toilet tissue, etc. will now have to be produced by Americans, for Americans. In other words, absolutely any thing and any service that Americans need/desire will have to be produced by Americans and, again, Americans will have to pay these other Americans to do that — enough payment so that these hard-working Americans will make enough “profit” to “save” enough money to be able to “retire” when they inevitably become physically decrepit.

    Here’s the most important question of all. WHO is going to play the role of “enemy” that is necessary to maintain the need, the justification, for the present economically-necessary military industrial complex? Answer: NOBODY. How are all the people employed in that MIC going to be employed after the disappearance of those “threats to national security”?

    How much is the above arrangement — again, an arrangement in which only Americans inhabit the planet, and in which the vast majority of wealth and large-scale capital equipment is owned by a truly microscopic percentage of the population of American for their own astronomical profit — going to “cost” Americans? Will Americans be able to “afford” that system, that arrangement?

    NO, they won’t!

    When I recently asked my brother in law why the American government finds it necessary to import vehicles, TVs, etc. from other countries, his reply was that “if they were produced by Americans in America, they would be too expensive”. (This coming from a man who hired a temporary foreign worker to give additional care to his elderly mother who was ALREADY living in a nursing home).

    So now to my point. Just as it is for the vast majority Americans now in our multi-national globalized world, Americans living in a America-only world could NOT “afford” what they need and what they want under the present economic arrangement in which the vast majority of wealth and large-scale capital equipment is owned/controlled by a microscopic percentage (and getting smaller by the day) of population for their own astronomical profit.

    THIS is why under the present economic system desperate slave labor is needed to provide what Americans need.

    THIS is why Americans can not afford to have enough children to maintain the present population and immigrants of a certain economic status have to be imported into America each and every year from now to eternity.

    THIS is why “trade agreements” such as NAFTA between international corporations are needed to exploit the most desperate people on the planet for the greater benefit of a much smaller percentage of the population.

    Again, what Americans desperately need TODAY is an economic system in which ALL Americans, not just a microscopic percentage, own/control large capital equipment COLLECTIVELY, and collectively provide the LABOR (by “divvying up” the necessary labor among ALL citizens) to operate that large-scale capital equipment.

    By providing THEIR labor to run THEIR capital equipment, farm THEIR land, take care of THEIR sick and elderly, etc., ALL Americans will have EARNED the right to comsume all of the goods and services produced by THIER large-scale captial equipment and THEIR labor. In other words, ALL Americans will get to “profit” from THEIR large-scale capital equipment and THEIR labor, not just a microscopic (and getting smaller by the day) percentage of the American population.

    • America had a vertical economy post W2. When 43 campaigned in 2000 he promised Ohio steel workers higher prices and Michigan Auto workers lower steel prices. Americans cannot afford their own products as long as the rentier class extracts the spread between low foreign wages and consumer prices, consumers who are subsidized by government programs, which is in turn subsidized by deficit spending, which is in turn subsidized by currency market manipulation and sterilized Treasury bonds in lieu of BIS cash payments. Never mind, the issue is automation, and the US worker owns the intellectual rights to robotics, which is human work copied by machine algorithms. Launch a class action suit, you don’t need to earn anything, you already own it.

      • The Rage says:

        China has nationalized investment. Not sure this tells us much Wolf, though their steel production isn’t going to rise much in terms of long trend.

        The U.S. has always thought via nihilistic relativism. Selfishness breeds decay.

        • W2 ended the US labor movement. China is a nation of collectivists without labor unions. We seem to be headed for one big oppressive world government, and one in which communism, at least in theory, will become the basis for a utopian revolution.

    • wkevinw says:

      Ishkabibble- if I read it right, you are correctly identifying the issues. Basically open borders is just exploiting the “low cost” countries and labor (outside and inside US borders) to make tradeable goods as inexpensively as possible.

      You correctly identify the extra costs in the US: labor, environmental, social security, etc. protections.

      The problem is that if you “collectivize” ownership (by making business decision based on “their” ownership/control) you are re-trying an experiment. This has been tried many times in the past- always with failure. A quick internet search will find these past experiments.

      The solution is to “close the borders” to “protect the labor market” in the US. This is a necessary evil if you are going to have the protections (labor, environmental, social). Big time capitalist/free market economists who were being truthful said this decades ago and it’s basically true prima facia.

      You have lots of people against this: politicians that want more immigration to get votes, and other politicians who want more to get cheap labor. You have economists serving their masters saying that “all trade is good” – even though they know it’s at best “near slave labor”.

      That’s what has to change.

      • Bobby Dents says:

        You can’t close the borders without ramifications to capital flows. You close the borders, debt based expansion ends. The end of debt based expansion means the return of rationing, which undermines capitalism because macro wise it’s inefficient.

        It’s more than “collectively” willed ownership, but tribalist view of nature. You keep on claiming it failed? ??? By what nature??? When the bourgeoisie executed 60 million Hans Chinamen in the 19th century, it laid the foundation for its destruction. How was Soviet “Russia” different than the British Empire???? It wasn’t

        Debt is debt. When it can’t expand capitalism is toast. The increased use of debt from investment during the 19th century to consumption in the 20th can’t go on forever. It stopped the Kalergi plan in its tracks and spoiled people to the point of destroying anything that doesn’t follow debt based systems. But push back isn’t coming from materialism anymore.

      • The Rage says:

        Without open borders, the US is toast. It needs them to keep debt flows financed. Isolation only works if you nationalize investment, further undermining capital flows. Then the wars must be fought over resource. More cost. A socialist can think like this because they think tribally………but a capitalist?????? They think like parasites.

        The U.S. historically has always pushed economic globalism to feed its aristocrats.

      • 91B20 1stCav (AUS) says:

        …why does it seem to me that employment/citizen ‘card-check’ could have been so easy to implement two (okay, maybe three) generations ago. Of course, that would have run afoul of both the votes vs. cheap labor factions, and, more pertinent to the times, would have been a very bad (as our race relations were, and are) world look for the U.S. during the Cold War’s international struggle for hearts and minds (and in the long run, probably would have provided an acceleration to near failed-state status of many of our southern neighbors). Now, having contributed my small bit to cheering us up, may we all-

        stay well and find that better day…

  25. bebe rebozo says:

    Anyone, correct me if i’m wrong. The Chinese government pays no interest on its portion of their national debt. The US government paid approximately 700 billion a year in 2019 or 2.6 % of its GDP. The 700 billion a year figure will be 1 trillion a year very soon.

    • Wolf Richter says:

      Sure there is money printing going on by the PBOC. But in terms of the debt issued by the Chinese government, it comes with interest, a lot more interest than in the US. The China 10-year government bond yield is currently 2.88%. That’s astronomical by Eurozone standards (German 10-year yield = negative) and by Japanese standards (10-year yield = 0.04%), and by US standards (10-year yield = 0.90%).

      But most of the debt is held by local and provincial governments, and they all pay interest.

      • Augusto says:

        Yes, but much of that interest goes to little people. In the West, little people are there to be fleeced. Either you go into cash and bonds and get fleeced slowly or you go into the stock market to be fleeced in large swaths. What’s important is keeping banks and the finance community prosperous not little people.

  26. Michael Engel says:

    1) There is less demand for oil and steel ore.
    2) When commodities prices are falling, China Silk Road enslaved
    nations cannot pay their bills. China lend them money, so their corrupt leaders will stay in power.
    3) They extract more, exporting more to China, less food for themselves. Without foreign currencies they suffer starvation.
    4) China used to be US frontier nation. We invested in China to make a
    better China, to better their poor farmers, for our own good and for the benefit of rest of the world. Peace on earth !!
    5) In the early 80’s, stunned militant steel workers were sitting outside, leaning on the fence, next to a shuttered USS Steel plant. Their middle class factory jobs moved to China.
    6) Market maker China replaced wall street. China is building hospitals, 5G steel tower and a naval ports across the globe, to provide Chinese jobs.
    7) China expanded their frontiers beyond their large metropolitan cities.
    8) Alfred Mahan strategists are facing Chinese imperialism.
    9) China extrapolated. China miscalculated. They forgot that their
    over extended expansion will create contraction.

  27. Michael Engel says:

    Moderation : FOX balance the NYT, CNN and GOOGL.

Comments are closed.