RE: Additional to FTSE 25027 Dec 2024 10:03
Troajan,
China's steel industry was weak during the 1980's and it was Japan that helped it to modernisehave . Yet it's understandable for a country to have protectionism when their steel industry is in the infantancy development stage. Tarriffs is the norm when it comes to country protectionism.
In international trade the aim of any organisation irrespective of the market sector is to over produce product x and then export surplus overseas. This could be anything from cars, iphones, steel, iron ore or even the food on your table. Call it overcapacity or dumping but the reality is it's simple globalisation and international trade.
The talk about subsidies is not exactly as it seems... If Ukraine gets cheap energy from nuclear power to produce their steel and iron ore then is it consider a subsidy or if labour cost is cheaper in Ukraine when compared to the west, then is it considered a subsidy. I'm afraid the reality is countries like Ukraine, China, Africa, Brazil, etc will always have a cost advantage in the factors of production and hence their end products will always be cheaper than the west. Yet... if you dig a bit deeper then the real cash subsidies are actually in the west where governments will give cash to their steel industry to modernise, keep jobs and the existance of the industry in their country. Take British Steel.
Trump is a tariff man and protectionist to the hilt. Won't allow the Japanese Nippon steel to takeover US Steel and will impose tariffs on overseas companies whom import into USA and deem a threat to their own US companies. It's not China that's affected its more like the USA versus the World.
If you watched the youtube video then you know exactly that China is evolving their steel and iron ore industry and thus becoming more efficient, productive and less reliant on overseas help to produce their high grade steel which in turn might impact FXPO. FXPO produces high grade iron ore pellets for it's biggest customer China a few years ago and now China has developed a new 'flash' blasting process to produce their own iron pellets from low grade iron soil at a more faster and cheaper price/cost. Thus increase competition on the world stage in iron ore pellet production will mean that FXPO might not obtain the stelar growths like before in it's share price so maybe we will see the highs of £3 in FXPO SP but the highs of £5 in FXPO SP or above might be a bit too high and optimistic.
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