Preface
"Trade wars are games with no winners, but every move can affect the entire chessboard," as the United States increases tariffs on Chinese steel products, the global market is in an uproar. This move undoubtedly has brought about significant changes to the Chinese steel market. Is it a coincidence, or a direct impact of policy?
I. The Impact of Increased U.S. Tariffs on China
The recent U.S. tariff policy on Chinese steel products has caused quite a stir. In an effort to "protect" the domestic market, the United States has doubled the tariffs on Chinese steel products. This move is aggressive, but it also hides subtleties.
This U.S. move is not a whim, but a premeditated strategy. Politically, the United States is working to reduce its economic dependence on China while enhancing its competitiveness in the international market.
Economically, the steel industry, as one of the key sectors of U.S. manufacturing, has always been regarded as a strategic national asset. To maintain the core competitiveness of U.S. manufacturing, increasing sanctions on Chinese steel seems to be an inevitable move. This is not only for the sake of domestic workers' jobs but also to ensure that the U.S. steel industry is not overwhelmed by China.
The sudden increase in these tariffs has directly triggered a chain reaction in the Chinese steel market. Firstly, domestic steel prices began to fluctuate, and some companies' previously stable orders started to become uncertain.
The rise in steel production costs and the decrease in export orders have put companies on edge, especially small and medium-sized steel enterprises that rely on exports, feeling unprecedented pressure.
Moreover, although the U.S. market is not large, it is a "high-profit" market. Losing this part of the market cannot be underestimated in its impact on China's steel industry chain.
Furthermore, the changes in the Chinese steel market have quickly spread globally. As the "big player" in global steel production and export, any movement in the Chinese market can potentially cause fluctuations in global steel prices.Southeast Asian and European steel markets have also become restless after witnessing the fluctuations in the Chinese market, with prices rising and market uncertainty increasing. The United States' move, though seemingly targeting China alone, has actually touched the nerves of the entire international market.
One cannot help but ask, is all of this a coincidence or inevitable? Is there really just a coincidental temporal overlap between the United States' tariff policy and the dramatic changes in China's steel market, or is there a deeper causal relationship at play? "When the city gate catches fire, the fish in the moat suffer," and Delon Nickel Industry, once the illustrious "King of Steel," now has to face the embarrassing situation of bankruptcy restructuring...
II. The bankruptcy restructuring of the "King of Steel," Delon Nickel Industry: Market reaction or internal and external troubles?
Let's first look at the glorious history of Delon Nickel Industry. The name of this company is thunderous in the steel circle. It not only has a huge production base in China but also has a grand investment in Indonesia, with an annual steel production of up to 9 million tons.
It can be said that Delon Nickel Industry holds a pivotal position in the global steel market. However, as the saying goes, "Rise and fall are both due to Xiao He," behind the glory of this company, there are also seeds of crisis.
So, what led to the bankruptcy of Delon Nickel Industry? Market fluctuations are, of course, the primary reason. The prices of the global steel and metal markets have experienced roller coaster-like changes in recent years, and the profit space of Delon Nickel Industry has been greatly compressed.
Especially after the United States doubled the tariffs on Chinese steel products, the uncertainty in the market has been exacerbated. Although the impact of this policy cannot be said to be the last straw that broke Delon's back, it is definitely a catalyst that accelerated the deterioration of its already shaky financial situation.
However, in recent years, China's steel production capacity has been overabundant, with fierce competition in the domestic market and price wars becoming almost the norm. Companies like Delon Nickel Industry, despite their large scale, also find it difficult to completely escape the impact of this market structural issue.
With large production capacity and high pressure, profits naturally become "high-risk." Coupled with weak international demand and the overall downturn in the global market, it is not hard to understand why Delon Nickel Industry has fallen into difficulty.
The bankruptcy restructuring of Delon Nickel Industry has undoubtedly caused a shock in the market, prompting many companies to re-evaluate their market strategies. The complex game of the global steel market also draws more attention to the performance of other countries in this situation, such as South Korea.III. The "Buck-passing" Behavior of South Korea's Steel Industry
The recent days have not been easy for South Korea's steel industry, with market performance plummeting all the way. Over the past two years, the South Korean steel market has suffered from a double blow of low demand and weak exports, feeling as if it has stepped into a "Waterloo."
Data shows that South Korea's steel exports have been on a continuous decline since 2019, and domestic demand has also gradually shrunk. All of this has plunged the South Korean steel industry into an unprecedented predicament. In today's popular terms, it is a "domestic and foreign troubles, cool warning."
In this situation, the reactions of South Korean media and the government are somewhat "perplexing behavior grand prize." Faced with the dual pressures of domestic and foreign markets, they have chosen a classic operation—buck-passing. This time, the target of buck-passing is China.
South Korean media accuses China's steel products of a "cheap offensive" that directly led to the predicament of South Korea's steel industry. They believe that Chinese steel,凭借 its low-price advantage, has swept the international market, squeezing South Korean steel companies to the point of breathlessness. The South Korean government also chimed in, stating that China's excess capacity has led to a global steel market where supply exceeds demand, and South Korea is naturally affected.
However, this buck-passing is somewhat arbitrary. Although China's steel exports hold an important position globally, South Korea's problems stem more from its own issues. The imbalance in the global steel market supply and demand is not a matter of a day or a moment, and South Korea's industrial structure adjustment speed is relatively slow, failing to respond to market changes in a timely manner.
Moreover, with weak domestic demand, the challenges faced by South Korean steel companies are much more complex than imagined. China's "cheap offensive" may have intensified market competition, but to attribute the decline of South Korea's steel industry entirely to China is a bit too much buck-passing.
The relationship between China and South Korea's steel markets is indeed close, but it is not as simple and direct as "you lose, I earn." In fact, the main battlefield for China's steel exports is not the South Korean market but more towards Southeast Asia, Africa, and other regions.
The shrinkage of the South Korean market is more due to the global economic slowdown and its own structural issues. Although the market performances of the two countries have mutual influences, they are not as the South Korean media claims, with Chinese steel being the "culprit" causing the predicament of the South Korean market.
In this grand chess game of the global steel market, every country is trying to find its own position. So, who will be the winner in the future?IV. The Direction of the Global Steel Market and China's Strategy
In the global steel market, the Chinese steel industry holds a position akin to being the central figure, firmly at the top. As the world's largest producer and exporter of steel, China's market share exceeds 50% of the global total output.
However, with the United States continuously increasing its tariff sanctions, the challenges faced by China's steel industry are growing. Consequently, China has had to adjust its strategies to secure its "central" position.
In response to the sanctions, China's strategies have been akin to employing "all possible means," starting with market diversification. China no longer relies on a single market but instead turns its attention to emerging markets such as Southeast Asia, Africa, and South America.
These regions are in the peak period of infrastructure construction, with a strong demand for steel. Chinese steel products have quickly penetrated the market with their cost-effective advantages, consolidating their position.
Additionally, Chinese steel companies have enhanced their competitiveness by improving technological levels. The proportion of high-end steel product exports is continuously increasing, leaping from the red ocean of the low-end market to the blue ocean of the high-end market. This strategy has further solidified China's position in the global steel market.
As Sino-American relations become increasingly tense, the rebalancing of the global market has become an inevitable trend. While the United States sanctions China, it is also promoting the revival of its domestic steel industry, attempting to reclaim a portion of the global market for itself.
This process is not easy, as other countries like India and Brazil, emerging market nations, are also gearing up to seize a share in the redistribution of the global steel market. This competitive landscape makes the future market structure more complex and unpredictable.
So, who will be the ultimate winner? It is too early to conclude. Although China has made significant progress in market diversification and technological advancement, other countries are also accelerating their pursuit. In this global game, whoever can adapt to market changes more quickly and find their unique advantages in competition will ultimately stand out.
ConclusionFluctuations in the global steel market are often influenced by a variety of factors, and the increase in U.S. tariffs on China undoubtedly became the spark that ignited this transformation. Although China faces significant challenges, with its unique position in the global market and flexible response, it may still be able to remain invincible. Who will be the ultimate winner in this game seems to have already shown some signs.
Leave a Reply