3 ms·

Most containers are made in China, so who knows, their economy is extremely distorted. Mills were producing steel well below cost for a long time, but ore pric

Most containers are made in China, so who knows, their economy is extremely distorted. Mills were producing steel well below cost for a long time, but ore prices have gone up and some inefficient mills are being shut down, so supply side costs increasing. Mills also reduced capacity significantly in 2020, causing a production bubble. https://www.fitchratings.com/research/corporate-finance/global-steel-price-rally-will-be-short-lived-02-02-2021 https://www.fitchratings.com/research/corporate-finance/glob...

Sabinus 6y ago
>Mills were producing steel well below cost for a long time How is this possible? Government subsidies?
- pestatije 6y ago
  It's cheaper than stopping production.
  - namibj 6y ago
    Notably, steel blast furnaces go offline once every 10~20 years, and that's to replace the firebrick lining on the inside. They take months to ramp up, and at least weeks with no output.
- angry_octet 6y ago
  Yes, it's the remnants of the command economy and production targets, but generally structured as state owned companies. As others have pointed out, you don't easily stop and start foundries.
rswail 6y ago
There's also a political trade dispute with Australia for metallurgical coal leaving ships stranded waiting to unload. In the meantime, iron ore prices are spiking.
- angry_octet 6y ago
  I think that India bought that coal; China is now relying on Brazil, which is having its own problems. Chinese sanctions on a broad range of Australian products were being supported by the Trump admin ("America First") but that is now changing. If conditions deteriorated and iron ore sanctions happened (by either China starting something in the South China Sea or some stupid Corona sanctions) then the Chinese economy would grind to a halt and metal prices globally would spike, and we'd be melting containers down for their scrap value.

Sabinus 6y ago

>Mills were producing steel well below cost for a long time How is this possible? Government subsidies?

pestatije 6y ago
It's cheaper than stopping production.
- namibj 6y ago
  Notably, steel blast furnaces go offline once every 10~20 years, and that's to replace the firebrick lining on the inside. They take months to ramp up, and at least weeks with no output.
angry_octet 6y ago
Yes, it's the remnants of the command economy and production targets, but generally structured as state owned companies. As others have pointed out, you don't easily stop and start foundries.

rswail 6y ago

There's also a political trade dispute with Australia for metallurgical coal leaving ships stranded waiting to unload. In the meantime, iron ore prices are spiking.

angry_octet 6y ago
I think that India bought that coal; China is now relying on Brazil, which is having its own problems. Chinese sanctions on a broad range of Australian products were being supported by the Trump admin ("America First") but that is now changing. If conditions deteriorated and iron ore sanctions happened (by either China starting something in the South China Sea or some stupid Corona sanctions) then the Chinese economy would grind to a halt and metal prices globally would spike, and we'd be melting containers down for their scrap value.