Protectionism Is Coming, Steel Output Edition

ZH: China Retaliates In Trade Wars - Increases Steel Output To Record High

Bloomberg: The `Iron Rooster' Boom That's Driving China's Steel Rally
The unexpected rebound in China’s steel market this year is set to keep rolling because record output by mills has so far failed to replenish inventories as the government cranks up stimulus to boost growth.

Stockpiles of steel reinforcement bar, used in construction, sank for a sixth week, contracting 6.8 percent in the period to April 15 in the biggest drop since October 2014, according to Shanghai Steelhome Information Technology Co. Rebar futures in Shanghai rallied to the highest in a year on Tuesday, and are up 39 percent in 2016. Spot prices have risen 46 percent.
The rally in 2016 follows five straight years of declines and has been a welcome respite for the world’s largest steel industry, which has been grappling with overcapacity, losses and forecasts for a long-term drop in the nation’s demand. In March, mills in China churned out more metal than any month on record as the economy stabilized, with a surge in new credit spurring a property sector rebound. The surprise rally in the biggest steel producer has also helped to lift global iron ore prices.
ZH quotes from Reuters:
Washington pointed the finger at China, saying Beijing needed to cut overcapacity or face possible trade action from other countries.

"Unless China starts to take timely and concrete actions to reduce its excess production and capacity ... the fundamental structural problems in the industry will remain and affected governments - including the United States - will have no alternatives other than trade action to avoid harm to their domestic industries and workers," U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman said in a statement.
Collision course.

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